Asked by Vansh Arora on Jul 22, 2024
Verified
At the end of its accounting period, December 31, of Year 1, Hsu's Financial Services has assets of $575,000 and stockholders' equity of $335,000. Using the accounting equation and considering each case independently, determine the following amounts.
(a) Hsu's liabilities as of December 31, of Year 1.(b) Hsu's liabilities as of December 31, of Year 2, assuming that assets increased by $56,000 and
shareholders' equity decreased by $32,000.(c) Net income or net loss during Year 2, assuming that as of December 31, Year 2, assets were $592,000,
liabilities were $450,000, and there were no additional investments or dividends.
Accounting Equation
A fundamental principle in accounting that states assets equal the sum of liabilities and owner's equity (Assets = Liabilities + Equity).
Net Income
The net income of a business following the subtraction of all costs, such as operating expenses and taxes, from its overall revenue.
Net Loss
The deficit that results when total expenses exceed total revenues in a specific accounting period, indicating a decrease in net assets.
- Comprehend the accounting equation and the impact of particular transactions on it.
- Determine and examine the overall assets versus liabilities in differing contexts.
Verified Answer
JW
Jordyn WilliamsJul 24, 2024
Final Answer :
(a) $575,000 − $335,000 = $240,000
(b) ($575,000 + $56,000) − ($335,000 − $32,000) = $328,000
(c) $592,000 − $450,000 = $142,000 shareholders' equity Year 2
$335,000 − $142,000 = $193,000 net loss
(b) ($575,000 + $56,000) − ($335,000 − $32,000) = $328,000
(c) $592,000 − $450,000 = $142,000 shareholders' equity Year 2
$335,000 − $142,000 = $193,000 net loss
Learning Objectives
- Comprehend the accounting equation and the impact of particular transactions on it.
- Determine and examine the overall assets versus liabilities in differing contexts.