"Rob L." <robtoo@[EMAIL PROTECTED]
> wrote
> I'm in a basic accounting class and I'm stuck on what is probably a
> relatively easy question. I'm not necessarily looking for an answer,
> but just some guidance on whether I'm getting things right. We're
> asked to solve for "X" in both cases for an imaginary not-for-profit
> company:
>
> December 31, 2001
>
> Assets: X
> Liabilities: $55,000
> Equity: $45,000
>
> This one is easy, unless my algebra is extremely rusty, X=$100,000
>
> During 2001
>
> Total Revenues: X
> Total Expenses: $330,000
>
> This one threw me because our text doesn't spell it out in detail.
> Wouldn't X in this case be $430,000, since revenues-expenses = net
> income, and net income would go in our assets column at the end of the
> year?
>
> I may be way off base, but I'm not sure. Btw, this is an online
> class, so I've sent my instructor the same message, but it could be
> awhile before I hear from him.
You're off base. Maybe mot even in the park.
It's not clear if this is a first year or not, so the actual answer may
vary
greatly.
Net incomes are what adds to what is being called equity. Actually
non-profits don't have a true equity, but the theory is the same.
Assuming
a beginning equity of $0, what would net revenue or net income need to be
to
make equity $45,000?
--
Paul Thomas, CPA
paulthomascpapc@[EMAIL PROTECTED]
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