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Given: Assets at the end = $6500 Liabilities at the end = $2000 Find: Equity (E) at the end = ? As we know Accounting Equation , so we have:             Assets at the end    =    Liabilities at the end   +   Equity at the end               E at the end         =      Assets at the end       -  Liabilities at the end               E at the end         =            $6500                    -              $2000 E at the end = $4500 So, the equity of the company at the end of the accounting period is $4,500 and at this balance of stockholders' equity, both sides (left side or assets side and right side or liabilities & equity side) o...

The Correct Answer of this Multiple Choice Question (MCQ) is (A) Owners' equity increased $30,000; Revenues Were $90,000 Explanation Of This Short Question: From Accounting Equation , we find change in Owner’s Equity and from owner’s equity formula, we find Revenues for the period (Assuming No Other Changes Take Place).         Assets   =  Liabilities   + Owner’s Equity  -  Expenses       -$20000  =   $10000  +  Change In Owner’s Equity   - $60000       Change In Owner’s Equity = -$20000 - $10000 + $60000 = $30000 Increase To calculate Revenues , we assume no other changes take place, so we have:       Net Income = Owner’s Equity         Revenues - Expenses = Owner’s Equity         Revenues - $60000 = +$3000         Revenues = +$30000 + $60000         ...

Answer Of Short Question We have:            Equity at the Beginning = $150,000            Assets Increased By = $70,000            Liabilities Increased By = $30,000           Assets at the Beginning = $200,000 Find: Equity at the End = ? Firstly, we calculate Change In Equity (increase or decrease) because after that we can find out equity at the end. As we know Accounting Equation , so we have:                            Assets                =        Liabilities      +         Equity                  Change In Equity       =   Change In Assets   -   Change In Liabilities       ...

Firstly, we find Assets at the end, then we know about how much the assets change at the year’s end. We know Accounting Equation :                        Assets   =    Liabilities   +   Owners’ Equity                        Assets   =      $75000     +         $10000                        Assets   =  $175000 Increase Now, How Much Change In Assets At The End Of The Accounting Period: Assets at the End             =    $175000 Assets at the Beginning  =  ($150000) Change In Assets             =     $25000 So, assets increased from $150000 to $175000 with an increase in Asse...

The correct answer of this multiple choice question (MCQ) is (A). Decreases Owners Equity as Expenses are less than Revenues and are necessary to earn profits for the business. So, increase in Expenses decrease Owner’s Equity . Example 1: Paid Rent Of $5000. What is the effect of this transaction on Owner's Equity? When the business paid rent of $5000, then we debit rent expense account and credit cash account. The rent expense affects the owner's equity as it is the result of operations of the business, so it decreases the owner's equity by $5000. Example 2: Paid Salaries to employees of $3000. What is the effect on Owner's Equity? We debit salaries account of $3000 and credit cash account of $3000. The salaries expense is also decreasing the owner's equity as salaries are paid to employees to run daily working of the business. So, expense accounts decrease the owner's equity or these have negative impacts on owner's equity but these are necessary to oc...

The correct answer is (D). Increase Owner’s Equity, as Revenues are greater than Expenses to earn profits, so it increases Owner’s Equity for the business. Example: Fees Earned $4000 during the period. What is the effect of this transaction on Owner's Equity? When the company rendered services to clients and received fees of $4000, then we debit cash account and credit fees earned account. The owner's equity is increased by $4000 as revenues have positive impacts on owner's equity. If revenues are less than expenses, then the business suffered a loss and this has adverse impact on owner's equity as loss are deducted from owner's equity. On the other hand, if the revenues are more than expenses, the business earned profits during the accounting period and such profit for the period is added to the owner's equity. So, revenues are positively related with owner's equity i.e., the more revenues earned by the business during the accounting period, the more th...

Solution To The Multiple Choice Question With Example The correct answer of this multiple choice question (mcq) is (A). Increase Total Assets, as Cash (which is a Current Asset ) invested into the business is an inflow of cash for business, so it will increase the total assets of the business. Example: Mr. A invested cash for $3000 into the business. It is a Business Transaction in which two accounts are involved. Cash Account, which is increasing, while Capital is also increasing which increased the Owner’s Equity on both sides of Accounting Equation as shown below:                                                              Assets     =     Liabilities     +     Owner’s Equity                         ...

A Solution To The MCQ With Brief Explanation With The Help Of An Example The correct answer is (B). “Increase Assets and Stockholders’ Equity”, as increase in Revenues increase Assets , as there are inflows of assets such as cash, accounts receivable, etc., and also more assets can be purchased by the business, and Stockholders’ Equity , as revenues are greater than expenses to gain profits and inflows of cash or  accounts receivable for the business. So, revenues increase stockholders’ equity as well as assets of the business. Example: Mr. A Sold Goods Worth $5000 For Cash This is a Sales Transaction , which increased Cash by $5000 and Sales by $5000 also. So, asset (Cash) also increased. So, we debit cash account and credit sales account. The effect of this Transaction   on Accounting Equation is shown below:                   Assets       =          Liabilities    ...