How to find net income/loss of a company based on equity along with owner's investment/withdrawals?
We know that net income/loss is found by this equation:
Net income/loss = Revenues - Expenses
But what if both revenue and expense statements are unknown? I have the following information of the company:
December 31, 2008
Assets: ,000
Liabilities: ,000
Equity: ,000
December 31, 2009
Assets: ,000
Liabilities: ,000
Equity: ,000
During the year 2009
Owner's Investments: ,000
Owner's Withdrawals: ,000
How do I find out the net income/loss based on the provided information?
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Net income can also be measured as the change in equity.
Net income/loss = Ending equity - Starting equity
In your case the equity has also been changed by the owner investing and withdrawing money from the company, so we need to adjust for that:
Net income/loss = Ending equity - Starting equity + owner withdrawals - owner investments
Net income/loss = 23000 + 10000 - 29000 - 12000 = -8000
The company had a net loss of 00.
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