Question

Assets increased by $100,000 during the year. Liabilities increased by $30,000 during the year. Dividends for the year were S50,000. Expenses for the year were $200,000. Capital contributions during the year were S25,000 Compute REVENUES for the year. Note: There are two types of equity: (I) Capital contributions (also called capital stock or paid-in capital) and (2) retained earnings. Capital contributions are amounts invested directly by the owners. Retained earnings represents the amount of assets created by profitable operations and kept within the business. Retained earnings are increased each year by net income and decreased each year by dividends paid to the owners. $320,000 $220,000 O $295,000 $270,000

Answer 1

Accounting equation assets =liabilities +owners equity

So if assets are increased another assets should be decreased or a liability should increase

Treatment of revenue and expense

Revenues as it ultimately increase owner equity via profit and loss account it is treated as liability for the equation purpose and vice versa in case of expense

Increase in assets = increase in liabilities - dividend + capital contribution-expense + revenue

100000=30000-50000+25000-200000+ revenue

Revenue =295000