If assets are $215,611, opening equity is $51,318, liabilities are $125,940 and income is $74,094, expenses must be:
Question
If assets are 51,318, liabilities are 74,094, expenses must be:
Solution
To find the expenses, we can use the accounting equation which is:
Assets = Equity + Liabilities
First, we need to find the closing equity. We know that equity changes when there is income or expenses. So, the equation becomes:
Closing Equity = Opening Equity + Income - Expenses
We can rearrange this equation to find the expenses:
Expenses = Opening Equity + Income - Closing Equity
But we don't have the closing equity. We can find it from the accounting equation:
Closing Equity = Assets - Liabilities
So, the closing equity is 125,940 = $89,671
Now, we can find the expenses:
Expenses = 74,094 - 35,741
So, the expenses must be $35,741.
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