Quickbook Balance Sheet showing strange numbers (to me at least)?

Question

I have been using quickbooks for some time (less than a year) and today when I was looking at my balance sheet I noticed something that seems really strange to me. My Total Assets number is $300,000. My total liabilities are $20,000. I then have the equity section which I don't claim to understand at all. It has retained earnings ($250,000), Net Income ($30,000) and total Equity which is $280,000. Then there is the Liabilities and Equity that is $30,000. What I can't figure out is that I would expect the very bottom figure to be $280,000 (assets - liabilities) but instead it is the same as my assets total! Can anyone explain to me what is going on? _all numbers given are examples only, not actual figures._

Answer 1

Assets = Liabilities + Owner's Equity. This is the accounting equation.

Assets example would be checking account balance, inventory, land and equipment, and accounts receiables (unpaid invoices)

Liabilities would be loans, unpaid bills (accounts payable), sales tax payable, payroll tax payable, and credit card balances

Equity would be retained earnings, owner's draw and owner's contribution.

In QBO, retained earnings will automatically post your income as it crosses over a new year.

Answer 2

The very bottom figure is the true accounting equation:

Assets = Liabilities + Equity

Assets $300,000

Liabilities $ 20,000

Equity:

Retained Earnings $250,000

Net Income $30,000

Totals $300,00 $300,000

Retained Earnings are earnings from the previous year(s)

Net income is earnings from the current period.