Ending balance of each main account are given as follows (according to the accounting records in year 2006):
Asset = 35000
Liabilities = 23000
By using the accounting equation (A = L + E), we can find that Owner's Equity = 12000.
The ending balance for this company in 2007 shows:
Asset = 43000
Liabilities = 27000
By using the same method, Equity is calculated using the accounting equation A = L + E.
Equity = 16000
The question is to calculate Net Income.
Net income, dividends, stocks are all part of the owner's equity in the accounting equation.
= OE Ending
Calculate Net Income:
What is net income?
Net income = 1300
Additional Links to Accounting Problems and Examples:
How to Calculate Net Income
Accounting Financial Statements
Credit Sales and Purchases Accounting Problems