Determine net income for the period if beginning owner's equity is $20,000, cash withdrawals by the owner amount to $7,000, and ending owner's equity is $37,000.
A)$10,000
B)$27,000
C)$24,000
D)$13,000

Question

Quizplus · Accepted Answer

Net income is calculated by adjusting the change in owner's equity for any withdrawals or contributions by the owner. Here, the owner's equity increased by $17,000 ($37,000 ending - $20,000 beginning). After accounting for the $7,000 withdrawal, the net income is $24,000 ($17,000 + $7,000).

Determine Net Income for the Period If Beginning Owner's Equity