At the end of the current year, the 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. 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

The change in equity is calculated by subtracting the increase in liabilities from the increase in assets: $120,000 - $72,000 = $48,000. Since the equity at the end of the year is $246,000, the equity at the beginning of the year was $246,000 - $48,000 = $198,000.

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