Question

if a start up business owner invests $25,000 cash and then borrows $15,000 from a bank, the owner's equity would be

Answer 1

The owner's equity would be $10,000

What is owner's equity?

Owners Equity is the residual interest that represents the portion remained to the investors such as partners and shareholders.

This is computed by deducting liabilities from the asset account, which includes capital accounts and retained earnings.

Using the accounting equation,

Assets = Liabilities + Equity

$25,000 = $15,000 + Equity

Equity = $25,000 - $15,000

Equity = $10,000

Therefore, owner's equity would be $10,000

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