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Is it possible for owner's equity to be a negative amount?

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Question ajoutée par Rana Alnajjar , Web developer , Lebcards
Date de publication: 2016/12/13
حمادة فوزي جمعة عشماوي
par حمادة فوزي جمعة عشماوي , مراجع حسابات الشركة , مؤسسة عاج العربية للمقاولات والصيانة

      167/5000 Yes, can property rights be negative phenomenon in the case if the company achievedaccumulated losses annually and if withdrawals partners too much negative equity thusshow

Abdullah Aziz Eldain Morsi  Elgendy -        CMA  Candidate
par Abdullah Aziz Eldain Morsi Elgendy - CMA Candidate , Regional Receivable Accountant , Amiantit Group of Companies

AS per the   accounting  equation

owners equity = assets- liabilities

if the total liabilities  is more than the assets , the owner equity will be  negative   

 

Wilfredo Quito
par Wilfredo Quito , Accounting Manager , DDC LAND INC.

it is possible, If a company reporting negative stockholders' equity were to liquidate, its stockholders would probably receive nothing in exchange for their original investments in the company's stock, though this depends on how much the company can earn by selling its remaining assets and settling any remaining..

 

manseer muhammed ali
par manseer muhammed ali , Accountant General , Royal Lighting L.L.C & Royal Furnishing LLC

The negative amount of owner's equity also means that the company's balance sheet will report liability amounts greater than the amount of assets. The company could operate under those conditions if its assets are turning to cash before the liabilities need to be paid.

In 2008, a sole proprietorship was begun with the owner investing $100,000. During the years 2008 through 2011 the owner withdrew most of each year's net income. As a result, the total owner's equity at the end of 2011 was $110,000 (original investment of $100,000 plus $10,000 of net income not withdrawn). During 2012 the company's expenses exceed revenues by $125,000 and there were no draws or additional investments by the owner. The owner's equity at the end of 2012 would be a negative $15,000.

Ahmed mohsen
par Ahmed mohsen , Senior Accountant , Main Poly Clinic

The negative amount of owner's equity also means that the company's balance sheet will report liability amounts greater than the amount of assets. The company could operate under those conditions if its assets are turning to cash before the liabilities need to be paid.

Anil Lalwani
par Anil Lalwani , Chief Accountant , Al Ahli Hospital

Yes possible

If owner has withdrawn whole amt. of profits and later loss exceeds the capital contributions.

OR he kept profit in owners equity but later losses are more than Capital contribution and profits.

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