The statement of owner's equity begins with the beginning balance followed by
A) adding net income less withdrawals
B) adding net income plus investments
C) adding investments less withdrawals
D) adding investments plus net income less withdrawals

Question

Quizplus · Accepted Answer

The statement of owner's equity calculates the ending balance of the owner's equity account. It begins with the beginning balance, which is typically the balance from the previous accounting period. The next step is to add any investments made by the owner during the period. Finally, any net income earned during the period is added, and any withdrawals made by the owner are subtracted. Therefore, the correct choice is D, which adds investments and net income less withdrawals.

The Statement of Owner's Equity Begins with the Beginning Balance