The statement of owner's equity is one of the primary financial documents of a small business. Together with the income statement, the balance sheet and the statement of cash flows, it offers a thoroughgoing view of a company's financial status. Net income is arrived at by deducting expenses from revenues. It is a measure of profitability. The net income figure appears on the owner's equity statement as an adjustment to that equity.
Step 1
Look over the owner's equity statement. You will see the owner's beginning equity, additional investments and withdrawals, as well as the ending equity.
Step 2
Look for the net income in the "additions" section of the statement. It is typically just beneath the "investments" line item.
Step 3
Check to see if the net income figure is positive or negative. If it is negative, it will be enclosed by parentheses and will be deducted from the beginning owner's equity figure. If it is positive, it will be added to the figure.
References
Tips
- You find the net income by reviewing (or creating) the income statement, a detailed report of revenues and expenses for the period in question. The net income is the final figure on the income statement.
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