Basic Accounting Equation Question

by Trina Brown
(Griffin, GA)

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Difficulty Rating:
Beginner

Time limit:
5 minutes



accounting equation Assets = Owner's Equity + Liabilities Q: Lynn Shackelford is the owner and operator of Galaxy LLC, a motivational consulting business. At the end of its accounting period, December 31, 2011, Galaxy has assets of $823,000 and liabilities of $198,000.

Using the accounting equation, determine the following amounts:

Owner's equity, as of December 31, 2012, assuming that assets increased by $156,000 and liabilities increased by $48,000 during 2012.



See comment further below for the answer to this question and detailed calculations...


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Comments for Basic Accounting Equation Question

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Please help me
by: Anonymous

I want to know this answer.

A:

The accounting equation is
ASSETS = LIABILITIES + EQUITY

So, for the year ended 2012:

Assets ($823,000 + $156,000) = $979,000
Liabilities ($198,000 + $48,000) = $246,000

Equity = Assets - Liabilities
Equity = $979,000 - $246,000
Equity = $733,000

The Equity as of December 31, 2012 is $733,000

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