Profit equals net change in owner's equity without drawings

Steps:

• Calculate net asset change: assets increased by $25,000, so +$25,000.
• Liabilities decreased by $5,000, which increases net assets, so +$5,000.
• Total change in net assets: $25,000 +$5,000 = $30,000 increase.
• With no drawings, this increase equals profit.

Why D is correct:

• Per the accounting equation (Assets = Liabilities + Owner's Equity), profit increases owner's equity by the net asset change ($30,000) when no drawings occur.

Why the others are wrong:

• A: Incorrectly treats net change as a loss.
• B: Ignores liability decrease, using only asset increase.
• C: Wrongly subtracts liability decrease from asset increase.

Final answer: D