In a question I was told that
Assets
Start of Year 110000
Year end 200000
Liabilities
Start of Year 45000
Year end 120000

I am asked to find the Net income under the various alternative

1. No investments made and no withdrawals.
2. An investment of 10000 was made but no withdrawals.
3. No investments made but a withdrawal of 22000 was made.

I know that Net Income = Revenue - Expenses
I also know that Assets = Liabilities + Owners Equity

I took the values that they gave me and used them as standards. In this way the only values that changed were the ones that affected equity.

Ans. For each of the cases respectively.
200000 = 120000 + 65000 + NI
NI = 15000

200000 = 120000 + 65000 + 10000 + NI
NI = 113000

200000 = 120000 + 65000 - 22000 + NI
NI = 145000

I got clarity from a question posted earlier by "numbers 201" and later ansd. By "KongTheKonqueror". I really appreciated this, but can someone check these ans. To verify for me.

Thank you in advance;
lieno
Lieno

A simpler way would be:

OE Start (110,000 - 45,000)
65,000

OE End (200,000 - 120,000)
80,000

Then make adjustments. In number 1, we know it was just net income, so therefore net income is 15,000

However you do it is OK though in the end.

Number 2,
Investment of 10,000 was there, so a 5,000 NI would get us to 80,000

Number 3,
22,000 was taken out, so NI was 22+15 = 37,000 to get to 80,000


You formulas are correct, but you didn't do your math correct

For example you have for number 2:

200,000 = 120,000 + 65,000 + 10,000 + NI
NI = 113000

120 + 65 + 10 + 113 does not equal 200

120 + 65 + 10 + NI (of 5) equals 200

Quote:

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Originally Posted by CaptainForest

A simpler way would be:

OE Start (110,000 - 45,000)
65,000

OE End (200,000 - 120,000)
80,000

Then make adjustments. In number 1, we know it was just net income, so therefore net income is 15,000

However you do it is ok though in the end.

Number 2,
Investment of 10,000 was there, so a 5,000 NI would get us to 80,000

Number 3,
22,000 was taken out, so NI was 22+15 = 37,000 to get to 80,000


You formulas are correct, but you didn’t do your math correct

For example you have for number 2:

200,000 = 120,000 + 65,000 + 10,000 + NI
NI = 113000

120 + 65 + 10 + 113 does not equal 200

120 + 65 + 10 + NI (of 5) equals 200

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Hey; thanks for the response.
lieno