At the end of the current year,the owners' equity in Barclay Bakery is $246,000.During the year,the assets of the business had increased by $120,000 and the liabilities had increased by $72,000.Owners' equity at the beginning of the year must have been:
A)$198,000.
B)$174,000.
C)$284,000.
D)$438,000.

Question

Quizplus · Accepted Answer

Owners' equity increases when assets increase more than liabilities. The increase in owners' equity is calculated as the increase in assets ($120,000) minus the increase in liabilities ($72,000), which equals $48,000. Therefore, the owners' equity at the beginning of the year was $246,000 (end of year) - $48,000 (increase) = $198,000.

At the End of the Current Year,the Owners' Equity in Barclay