Luis Consulting started the year with total assets of $60000 and total liabilities of $17000. During the year the business recorded $48000 in consulting revenues and $36000 in expenses. Luis made an additional investment of $8000 and withdrew cash of $9000 during the year. Owner's equity changed by what amount from the beginning of the year to the end of the year?
A) $3000.
B) $11000.
C) $12000.
D) $45000.

Question

Quizplus · Accepted Answer

The change in owner's equity can be calculated by adding the net income (revenues - expenses) and the additional investment by the owner, then subtracting the owner's withdrawals. Net income = $48000 - $36000 = $12000. Change in owner's equity = $12000 (net income) + $8000 (additional investment) - $9000 (withdrawals) = $11000.

Luis Consulting Started the Year with Total Assets of $60000