Explain briefly how each of the following transaction would affect a company’s balance sheet. (Remember, assets must equal liabilities plus owners equity before and after the transaction.) Sale of used equipment with a book value of $300,000 for $500,000 cash.

Cash rises $500,000; plant and equipment falls $300,000; equity rises $200,000. More test answers on https://studyhippo.com/fina-4300-ch-1/

The owners equity in a business increases from:

Excess of revenue over expenses and investments by the owner More test answers on https://studyhippo.com/clep-financial-accounting-practice-exam/

A business activity that changes the assets , liabilities, or owners equity

Transaction More test answers on https://studyhippo.com/accounting-and-business-cghs/

The account used to summarize the owners equity in the business

Capital Account More test answers on https://studyhippo.com/accounting-and-business-cghs/

A transaction for the sale of goods or services results in an increase in owners equity

True More test answers on https://studyhippo.com/accounting-true-and-false/

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Owners Equity Flashcards, test questions and answers

Q: owners equity = ___ ____

net worth More test answers on https://studyhippo.com/acc-test-1/

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What is Owners Equity?

Owners Equity is the money that belongs to the owner of a business. It is also known as net worth or shareholder’s equity, and it represents the difference between a company’s assets and liabilities. It reflects the amount of money that would be returned to shareholders if all of a company’s assets were liquidated and all debts were paid off.Owners Equity can be increased in two ways. The first way is through investments from shareholders or owners, such as when they buy additional stock in their companies or when investors provide capital for new projects. The second way is through earnings retained by the business, which are profits kept within the company instead of being distributed among shareholders as dividends. Both methods result in more money available to fund operations, invest in new products or services, pay down debt, and grow overall wealth creation for owners. There are several factors that determine Owners Equity levels: company profits; contributions from owners; taxes paid; debt levels; expenses incurred; depreciation allowances; share repurchases and other activities related to shareholder value; asset sales/liquidations; investment returns on retained earnings/dividends paid out; and changes in market values of investments held by owners (such as stocks). Owners Equity should not be confused with revenue or profits because it does not represent income earned during a certain period but rather accumulated wealth over time. Businesses require Owners Equity to survive over time because it provides a cushion against unexpected losses due to economic downturns, changes in consumer demand or preferences, competition from other businesses, etc., while still allowing them to take advantage of potential opportunities for growth when they arise. As such, managing this form of equity properly can help businesses maintain their financial health over time while still positioning themselves for success even during difficult times.