Math equation behind these problems are straight forward and are following :

1.1.Net Income/Loss = Retained earning - dividend

1.2.Net income/Loss = Revenue - Expenses.

2.1Total Assest = Cash + AccountReceivable+ Equipment ( any type of material gain/loos)

2.2. simple version :Total Assets = Liability + Stockholder Equity

spread out version :

2.3Cash + Account Receivable +Equipment= (Acc. Payable + Note payable) +( Capital Stock + Retained Earnings)

Regardlessthat math isstraightforward I had a problem resolving what is going where in practice test.

Problem 1: Net income problems

During 2016 Banigo Coorp experienced an increase in total assets of 72 600 and an increase in total liablilities of 40 900. Assumining that capital stock increased by 5000 and no dividend were paid, calculate Baningo's net income or net loos in 2016.

NI = R-E

In problem with Banigo Corporation in calculation net income/loss we have following variables :

total asset

total liabilities

capital stock INCREASED

dividend paid

In this case revenue = total asset

expenses = total liability + capital stockincreased

In this problem we did not ignore capital stock like we did in previous net income problem.Q1:is it because it changes the value?

So on our net income even when we are given multiple options (like cash, equipment and anything else that is in in equation 2.3. ) is effected only by those options that have changed in period time that we are measuring. In this case if we are given only capital stock ( nothing else written with it) that would mean that we would just ignore that information and our total expenses = total liability

Problem 2.

Hofnim, Inc had the following account balance on September 30,2016. What is Hofnim's net income for the month of September?

Second part is focusing on Hofnim. Inc problem with calculating net income;

We were given following :

Acc. Payable. Capital Stock, Cash, Equipment, Fees Earned, Miscellaneous expense, Rent expense, Retained earnings, Wages expense.We are not given dividends.

Formulas 1.1 was applied.

1.1.NI = R - E

1.2. NI= Retained Earnings - Dividends

In this caserevenues = fees earned, but not cash ,acc payable, equipment or retained earnings.

If in previous questions we were using total assets (it specified that are increased) to calculate our revenues.Q2;Here we are not using it because we are not given any information if it changed? If we did have information of change we would be adding it to our calculations.And the same note if here was written thatretained earningswere changed(increased) would we be adding them to revenues, and if they decreed that would be expense ?

Q3: Also in test if we are not given an information we are not aloud to assume it that is zero?For example, we were not given information about dividends but that does not means that it is zero. If we can assume that dividends are zero then in applying 1.2. net income equation (NI= RE-D ) we are not having the same solution as applying the formula 1.1.

Problem 3.

Pelican, Inc had a revenue of 395 000, of 155 000 and a of 54 000 during a current year. Based on the given information, what is the net income?

In Pelican,Inc problem we are given following :

revenue

expenses

dividends---- all 3 of them in the given year

Why is here net income = r-e do no include dividends . In my understand if in xzy period of time dividends are given ( paid off) that is money that is leaving our company (profit that is paid off to owner of a company and it is leaving the internal money circulation) so that is an expense.Q4: Why is not here? If a paycheck is an expense for company, why dividend is not?

Summary :My problem is how to defined revenues and expenses?Can we use the following understanding of it : revenues are everything that produce income/ assets in time period we are focusing on. If things that do have income values are given in problem but their values did not change we are not taking that piece of information in aspect? Can we apply same logic on expenses?