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The amount of assets, liabilities and owner’s equity are changed by business transactions. it is true please give a explanation?

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Question added by Ashika Nand
Date Posted: 2017/01/31
Salman Saeed
by Salman Saeed , Business Planning and Forecasting Manager , Emaar - Saudi Arabia

A sales transaction will increase bank/cash/receivables while decreasing inventory, on the other hand it will increase equity through profit for the year added into accumulated profits.

A loan acquired will increase bank/cash and increase the loan payable liability, this transaction will balance off the effect of increase in asset with increase in liabilities and will not effect equity.

A share issue will increase the equity and the funds generated from share issue will increase the assets.

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