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    newland5's Avatar
    newland5 Posts: 1, Reputation: 1
    New Member
    		  
    #1

    Jul 18, 2014, 10:02 PM
    Lamens terms for me please net income and net loss I cant figure it out
    I begun my business in 2011 with
    Investment of 93,244
    Drawings were 23,569
    Total assets were 467,127
    Total liabilities were 247,653
    I can't figure out my net income??


    so i figured out my net for 2011 was 149,799
    thank you very much
    how would i figure my net loss what would be the formula?????
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
    Ultra Member
    		  
    #2

    Jul 19, 2014, 09:38 AM
    First you need to get ending owners equity.

    The basic accounting equation is:
    Assets = Liabilities + Owners Equity

    This formula can be rewritten as:
    Owners Equity = Assets - Liabilities

    Now you can find net income by using the changes in equity equation, which is:
    Ending Owners Equity = Beginning Owners Equity + Investments + Net Income (Revenues - Expenses) - Drawings (Dividends)


    This formula can be rewritten to find Net Income as:
    Net Income = Ending Owners Equity - Beginning Owners Equity (initial investment) - additional investments + Drawings

    Jan 1 Owners Equity, which is beginning equity will be your initial investment

    Dec 31 is your ending assets or total assets, ending liabilities or total liabilities, and ending or total owners equity
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