A basic financial question regarding revenue

"Rob L." wrote

You're off base. Maybe mot even in the park.

It's not clear if this is a first year or not, so the actual answer may vary greatly.

Net incomes are what adds to what is being called equity. Actually non-profits don't have a true equity, but the theory is the same. Assuming a beginning equity of $0, what would net revenue or net income need to be to make equity $45,000?

Are you saying I'm wrong on the first problem as well?

First part is correct, assets = liabilities + equity.

Your second part is off the mark.

Think through it.

okay, I'm going to give it a shot...

If we are assuming a starting equity of 0, then revenue would need to be $375K to make equity $45K, as in the original problem. I also note that the next problem asks how that would change if the previous year's equity was $30K. Would this be carried over as revenue into

Yup.

Ummm....nope.

Try $345,000 of revenues, leaving $15,000 of current profit, added to the $30K of retained earnings from prior years.

Thanks for the help, Paul. I think I'm getting it now.