 # Basic Accounting Equation Question

by Trina Brown
(Griffin, GA)

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Difficulty Rating:
Beginner

Time limit:
5 minutes 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

 Please help me by: Anonymous I want to know this answer.A:The accounting equation isASSETS = LIABILITIES + EQUITYSo, for the year ended 2012:Assets (\$823,000 + \$156,000) = \$979,000Liabilities (\$198,000 + \$48,000) = \$246,000Equity = Assets - LiabilitiesEquity = \$979,000 - \$246,000Equity = \$733,000The Equity as of December 31, 2012 is \$733,000

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