{"id":218934,"date":"2025-05-24T17:05:49","date_gmt":"2025-05-24T17:05:49","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=218934"},"modified":"2025-05-24T17:05:52","modified_gmt":"2025-05-24T17:05:52","slug":"shep-companys-records-show-the-following-information-for-the-current-year","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2025\/05\/24\/shep-companys-records-show-the-following-information-for-the-current-year\/","title":{"rendered":"Shep Company\u2019s records show the following information for the current year."},"content":{"rendered":"\n

Shep Company\u2019s records show the following information for the current year.<\/p>\n\n\n\n

Beginning of year
Total assets $ 50,000
Total liabilities $ 22,000
End of year
Total assets $ 80,000
Total liabilities $ 35,000<\/p>\n\n\n\n

The Correct Answer and Explanation is:<\/mark><\/strong><\/p>\n\n\n\n

\u2705 Correct Answer: $17,000 Increase in Owner\u2019s Equity<\/strong><\/h3>\n\n\n\n
\n\n\n\n

\ud83d\udd0d Explanation <\/strong><\/h3>\n\n\n\n

To determine the change in owner\u2019s equity<\/strong> for Shep Company over the year, we apply the accounting equation<\/strong>:<\/p>\n\n\n\n

\n

Assets = Liabilities + Owner\u2019s Equity<\/strong><\/p>\n<\/blockquote>\n\n\n\n

Rearranging, we find:<\/p>\n\n\n\n

\n

Owner\u2019s Equity = Assets \u2013 Liabilities<\/strong><\/p>\n<\/blockquote>\n\n\n\n

This equation reflects the financial position of a business and shows that any increase or decrease in assets or liabilities directly affects owner\u2019s equity\u2014assuming no owner contributions or withdrawals are made during the year.<\/p>\n\n\n\n

At the beginning of the year<\/strong>, Shep Company had assets of $50,000 and liabilities of $22,000. Using the equation:<\/p>\n\n\n\n

    \n
  • Owner\u2019s Equity = $50,000 \u2013 $22,000 = $28,000<\/strong><\/li>\n<\/ul>\n\n\n\n

    At the end of the year<\/strong>, assets increased to $80,000, and liabilities rose to $35,000:<\/p>\n\n\n\n

      \n
    • Owner\u2019s Equity = $80,000 \u2013 $35,000 = $45,000<\/strong><\/li>\n<\/ul>\n\n\n\n

      The difference in owner\u2019s equity from the beginning to the end of the year is:<\/p>\n\n\n\n

        \n
      • Change = $45,000 \u2013 $28,000 = $17,000 increase<\/strong><\/li>\n<\/ul>\n\n\n\n

        This $17,000 increase in owner\u2019s equity indicates that Shep Company\u2019s net worth grew during the year. This change could be attributed to various factors such as:<\/p>\n\n\n\n

          \n
        • Net income generated from business operations<\/li>\n\n\n\n
        • Additional capital invested by the owner<\/li>\n\n\n\n
        • A combination of profits and capital contributions, minus any withdrawals<\/li>\n<\/ul>\n\n\n\n

          Such a positive shift is a strong indicator of financial health. It suggests that the business was able to expand its assets faster than its liabilities, likely through profitable operations or increased investment.<\/p>\n\n\n\n

          Understanding the change in owner\u2019s equity helps stakeholders assess the company\u2019s performance, financial management, and long-term sustainability. It reflects the owner’s stake in the company and serves as a useful metric for evaluating how well the company is generating value over time.<\/p>\n\n\n\n

          \"\"<\/figure>\n","protected":false},"excerpt":{"rendered":"

          Shep Company\u2019s records show the following information for the current year. Beginning of yearTotal assets $ 50,000Total liabilities $ 22,000End of yearTotal assets $ 80,000Total liabilities $ 35,000 The Correct Answer and Explanation is: \u2705 Correct Answer: $17,000 Increase in Owner\u2019s Equity \ud83d\udd0d Explanation To determine the change in owner\u2019s equity for Shep Company over […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-218934","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/218934","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=218934"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/218934\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=218934"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=218934"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=218934"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}