Question

A company purchases an assets half-paid company & half paid owner personally how is the entry.

Answer 1

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)

Assets = Liabilities + Equity

112,000 = 12,000 100,000

In a sole-proprietorship, equity is actually Owner’s Equity. If the business in question is a corporation, equity will be held by stockholders, which uses stockholder’s equity but the basic equation is the same:

ASSETS = LIABILITIES + EQUITY

For Example:

A business owes $35,000 and stockholders (investors) have invested $115,000 by buying stock in the company. The assets owned by the business will then be calculated as:

$35, 000 (what it owes) + $115,000 (what stockholders invested) = $150,000 (what the company has in assets)

Assets = Liabilities + Equity

150,000 = 35,000 115,000

Since each transaction affecting a business entity must be recorded in the accounting records based on a detailed account (remember, file folders and the chart of accounts from the previous section), analyzing a transaction before actually recording it is an important part of financial accounting. An error in transaction analysis could result in incorrect financial statements.

Explanation:

Hope it will help you!!!!