# Basic Accounting Equation Question

by Trina Brown
(Griffin, GA)

Before you begin: For purposes of exams and testing it's important to make sure you not only answer the questions correctly but are completing them at the right speed. Be sure to use a watch or clock to time yourself for this exercise.

Difficulty Rating:
Beginner

Time limit:
5 minutes

## Question:

Lynn Shackelford is the owner and operator of Galaxy LLC, a motivational consulting business.

At the end of its accounting period, December 31, 2023, 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, 2024, assuming that assets increased by \$156,000 and liabilities increased by \$48,000 during 2024.

## Solution:

The accounting equation is:

ASSETS = LIABILITIES + OWNER’S EQUITY

So, for the year ended 2024:

Assets = \$823,000 + \$156,000 = \$979,000 (1)
Liabilities = \$198,000 + \$48,000 = \$246,000 (2)

Owner’s Equity = Assets - Liabilities
Owner’s Equity = \$979,000 - \$246,000
Owner’s Equity = \$733,000

The Owner’s Equity as of December 31, 2024 is \$733,000 (3)

That's it! Hope you enjoyed our basic accounting equation question.

All the best in your studies!

Best,
Michael C.
Accounting-Basics-for-Students.com

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