Chapter 1, Problem 1.7SE

To determine

Accounting equation: Accounting equation is an accounting tool expressed in the form of equation, by creating a relation between resources or assets of a company and claims of resources to creditors and owners. Accounting equation is expressed as shown below:

$\text{Assets = Liabilities + Equity}$

Net income: The bottom line of income statement which is the result of excess of earnings from operations (revenues) over the costs incurred for earning revenues (expenses) is referred to as net income. Net income is calculated as shown below:

$\text{Net income = Revenues–Expenses}$

To solve: (1) For expenses using accounting equation, (2) Find out if R Doors earned net income or net loss