Question

give an example for each of the following types of transactions-
a. increase in liability, decrease in owner's capital
b. decrease in liability, increase in owner's capital

Answer 1

a. increase in liability, decrease in owner's capital-

Conversion of share capital into debentures.ie, increase in debentures and decrease in share capital .

b. decrease in liability, increase in owner's capital -

Conversion of debentures into shares.,ie. increase in share capital and decrease in debenture (long term liability )

Hope its useful ..!!!!