The Expanded Accounting Equation

Start with the basics! Remember - the basic accounting equation is Assets=Liability+Equity. This equation is best used when solving for questions 1 and 2.

When solving for questions 3-6, the following equations should be used:

Assets=Ending Assets-Beginning Assets

Liabilities=Ending Liabilities-Beginning Liabilities

Assets=Liabilities+Owner, Capital-Owner, Withdrawals+Net Income First, solve for the differences in assets and liabilities, then use these in the expanded accounting equation to calculate the answer. Verify your calculated answer by inserting it back into the equation and solving to validate the equation is in balance.

Using the expanded accounting equation, calculate and enter the answers for each question. You will need to use the answers you calculate for beginning and ending equity to answer the rest of the questions.

Assets Liabilities

Beginning of Year:$28,000 $16,000

End of Year:$63,000 $27,000

1) What is the equity at the beginning of the year?

Beginning Equity_____

2) What is the equity at the end of the year?

Ending Equity______

3) If the owner contributes $6,500 and the owner withdraws $39,000, how much is net income (loss)?

Net Income (Loss)_______

4) If net income is $1,400 and owner withdrawals are $7,500, how much did the owner contribute (owner, capital)?

Owner, Capital_______

5) If the owner contributes $15,800 and net income is $17,700, how much did the owner withdraw (owner, withdrawals)?

Owner, Withdrawals_______

6) If the owner contributes $43,900 and the owner withdraws $2,400, how much is net income (loss)?

Net Income (Loss)_________