Question

current attempt in progress
owners capital at the end of the period is equal to
owners capital at the beginning of the period plus investments plus net income minus liabilities.
net income.
owners capital at the beginning of the period plus investments plus net income minus drawings.
assets plus liabilities.

Explanation:

To determine the correct formula for owner’s capital at the end of the period, we recall the accounting equation and the components affecting owner’s equity:

• Option 1: Incorrect. Liabilities are not directly subtracted from owner’s capital in this context (liabilities relate to the accounting equation \( \text{Assets} = \text{Liabilities} + \text{Owner's Equity} \), but the end - of - period capital calculation focuses on equity changes).
• Option 2: Incorrect. Net income is just one component; beginning capital, investments, and drawings also matter.
• Option 3: Correct. The formula for owner’s capital at the end of the period is \( \text{Owner's Capital (End)}=\text{Owner's Capital (Beginning)}+\text{Investments}+\text{Net Income}-\text{Drawings} \). Investments increase equity, net income (from revenues - expenses) increases equity, and drawings (owner withdrawals) decrease equity.
• Option 4: Incorrect. \( \text{Assets}+\text{Liabilities} \) does not relate to owner’s capital; the accounting equation is \( \text{Assets}=\text{Liabilities}+\text{Owner's Equity} \), so \( \text{Owner's Equity}=\text{Assets}-\text{Liabilities} \), not \( \text{Assets}+\text{Liabilities} \).

Answer:

C. owner’s capital at the beginning of the period plus investments plus net income minus drawings.