Native Dave's Consultants had the following balance sheet amounts at the beginning of the year:
$\begin{array}{lr}
\text { Total assets } & \$ 400,000 \
\text { Total owners' equity } & 150,000
\end{array}$ During the year,total assets increased by $100,000 and total liabilities increased by $40,000.The company also paid $30,000 in dividends.No other transactions occurred except revenues and expenses.How much is net income for the year?
A)$30,000
B)$60,000
C)$70,000
D)$90,000

Question

Native Dave's Consultants had the following balance sheet amounts at the beginning of the year: 
$\begin{array}{lr}
\text { Total assets } & \$ 400,000 \
\text { Total owners' equity } & 150,000
\end{array}$ During the year,total assets increased by $100,000 and total liabilities increased by $40,000.The company also paid $30,000 in dividends.No other transactions occurred except revenues and expenses.How much is net income for the year?
A)$30,000
B)$60,000
C)$70,000
D)$90,000

Quizplus · Accepted Answer

The net income for the year is calculated by considering the increase in total assets, the increase in total liabilities, and the dividends paid. The increase in equity is the net income minus dividends. The increase in assets ($100,000) minus the increase in liabilities ($40,000) gives us the increase in equity due to net income, which is $60,000. Adding the dividends paid ($30,000) to this amount gives us the net income of $90,000.

Native Dave's Consultants Had the Following Balance Sheet Amounts at the Beginning