View Full Version : What is the Owner's Capital?
bluebayou
Oct 17, 2014, 12:31 PM
If I am given the amounts of the following: assets, liabilities, owner's withdrawal, revenues and expenses, how do I determine the owner's capital? Any help given would really be appreciated.
pready
Oct 17, 2014, 01:07 PM
You need to know the basic accounting equation, which is: Assets = Liabilities + Owners Equity
Which can be rearranged to: Owners Equity = Assets - Liabilities
First solve for Owners Equity. This will be ending owners equity.
Now you can solve for owners capital, which is beginning owners equity. You need to know the changes in owners equity formula, which is: Ending Owners Equity = Beginning Owners Equity + Revenues - Expenses - Owners Withdrawals
This can be rearranged to: Beginning Owners Equity(owners capital) = Ending Owners Equity - Revenues + Expenses + Owners Withdrawals.