supposing mr john started business with 1,000,000 report financial 70,000 machineries 50,000 goods 500,000 rentage 200,000 what is the capital of the business? supposing Mr John took away 100,000 for his personal use it is called what? according to business entity capital is called what? according to business entity concept what are the assets of the company

ANSWER:

An accounting transaction is a business activity or event that causes a measurable change in the accounting equation. An exchange of cash for merchandise is a transaction. Merely placing an order for goods is not a recordable transaction because no exchange has taken place. In the coming sections, you will learn more about the different kinds of financial statements accountants generate for businesses.

In the previous section we described specific types of accounts that business activities fall into, namely:

Assets (what it owns)

Liabilities (what it owes to others)

Equity (the difference between assets and liabilities or what it owes to the owners)

These are the building blocks of the basic accounting equation. The accounting equation is:

ASSETS = LIABILITIES + EQUITY

For Example:

A sole proprietorship business owes $12,000 and you, the owner personally invested $100,000 of your own cash into the business. The assets owned by the business will then be calculated as:

$12,000 (what it owes) + $100,000 (what you invested) = $112,000 (what the company has in assets)

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