Marma
BUSCONS RECITATION CHAPTER 7
Equity- owner's share of the assets of a company. In a corporation, it is represented by shares of common or preferred stock
Equity is the ownership interest of investors in a business firm. Investors can own equity shares in a firm in the form of common stock or preferred stock. Equity ownership in the firm means that the original business owner no longer owns 100% of the firm but shares ownership with others.
On a company's balance sheet, equity is represented by the following accounts: common stock, preferred stock, paid-in capital, and retained earnings. Equity can be calculated by subtracting total liabilities from total assets.
Examples:
Small business owners have to put up some of their own money, or equity, in order to start their business and before seeking financing from other sources.
----
Fixed assets- those that are of a relatively permanent nature and are necessary for the functioning of the business
A fixed asset can be defined as a long-term tangible property piece owned by a firm and used for the purpose of income-generation. A fixed asset is not expected to be consumed or converted into cash before a time period of one year. Fixed assets are, sometimes, as a group, referred as “plant”. Some good examples of fixed assets include real estate, buildings, equipment, and furniture. However, intangible long-term assets like patents and trademarks are not treated as fixed assets but are referred as “fixed intangible assets”
Reflecting changing value of fixed assets in a company’s accounts
The business obtains several years’ extended benefits from a fixed asset. For instance, a company can use a single piece of production machinery for several years, while a company owned motor car used by a salesman features, probably, a shorter useful life. By accepting the fact about short and limited life of a fixed asset, it becomes essential for the business accounts to recognize the benefits of fixed assets for it is consumed
Equity- owner's share of the assets of a company. In a corporation, it is represented by shares of common or preferred stock
Equity is the ownership interest of investors in a business firm. Investors can own equity shares in a firm in the form of common stock or preferred stock. Equity ownership in the firm means that the original business owner no longer owns 100% of the firm but shares ownership with others.
On a company's balance sheet, equity is represented by the following accounts: common stock, preferred stock, paid-in capital, and retained earnings. Equity can be calculated by subtracting total liabilities from total assets.
Examples:
Small business owners have to put up some of their own money, or equity, in order to start their business and before seeking financing from other sources.
----
Fixed assets- those that are of a relatively permanent nature and are necessary for the functioning of the business
A fixed asset can be defined as a long-term tangible property piece owned by a firm and used for the purpose of income-generation. A fixed asset is not expected to be consumed or converted into cash before a time period of one year. Fixed assets are, sometimes, as a group, referred as “plant”. Some good examples of fixed assets include real estate, buildings, equipment, and furniture. However, intangible long-term assets like patents and trademarks are not treated as fixed assets but are referred as “fixed intangible assets”
Reflecting changing value of fixed assets in a company’s accounts
The business obtains several years’ extended benefits from a fixed asset. For instance, a company can use a single piece of production machinery for several years, while a company owned motor car used by a salesman features, probably, a shorter useful life. By accepting the fact about short and limited life of a fixed asset, it becomes essential for the business accounts to recognize the benefits of fixed assets for it is consumed