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Accounting equation

Asked Jan 20, 2012, 07:56 AM — 2 Answers
Eventually as revenue increses, owners equity will_____________-

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petrussell's Avatar
petrussell Posts: 4, Reputation: 10
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#2

Jan 20, 2012, 07:58 AM
Accounting equation
As expense increaseowner's equity wll eventually ____
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pready's Avatar
pready Posts: 2,662, Reputation: 882
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#3

Jan 20, 2012, 09:04 AM
Revenues - Expenses = Net Income

Net Income - Cash Dividends is added to Owners Equity as Retained Earnings at the end of an accounting period.

Therefore an increase in revenues and or a decrease in expenses increases Net Income, which in turn increases Retained Earnings and ultimately increases Owners Equity.
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