Question

State any example for both increase and decrease in outsiders equity

Answer 1

Question is not understandable........

Answer 2

Answer:

• Interest on capital is one example where both increase and decrease in outsiders equity .

Being an expense , this will reduce the capital by the amount of interest and on the other hand interest on capital would be added to the capital of the proprietor.

• Interest on drawing

Being an income of the business, this will increase the proprietor’s capital with the amount of interest on drawings and decreases proprietor’s capital with same amount.