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    jahubb's Avatar
    jahubb Posts: 27, Reputation: 1
    New Member
    		  
    #1

    Jan 15, 2008, 01:09 PM
    Investment by owners?
    If a company has assets of $350,000, liabilities of $310,000, and retained earnings of $180,000, investments by owners must be?
    A. $40,000
    B. $225,000
    C. $295,000
    D. $310,000
    I answered D. my answer was wrong. Can someone please tell me what I did wrong.
    Thank You in advance
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
    Ultra Member
    		  
    #2

    Jan 17, 2008, 12:32 PM
    The Accounting equation is:

    Assets = Liabilities + Owners Equity
    Therefore:

    $350,000 Assets - $310,000 Liabilities = Owners Esquity

    Owners Equity = $40,000
    jahubb's Avatar
    jahubb Posts: 27, Reputation: 1
    New Member
    		  
    #3

    Jan 17, 2008, 10:48 PM
    Thank You, I figured it out, It was the wording, Investments vs. Owners Equity. I feel really stupid. Thank You
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