CURRENT AFFAIRS

Detailed explanation-1: -When Owner is bringing capital, it increases owners equity along with the cash or bank balance. Hence both assets and owners equity increases. Was this answer helpful?

Detailed explanation-2: -In privately owned companies, the retained earnings account is an owner’s equity account. Thus, an increase in retained earnings is an increase in owner’s equity, and a decrease in retained earnings is a decrease in owner’s equity.

Detailed explanation-3: -Transaction: Cash Sales. Reason: The cash sales will increase the cash balance (assets) and will also increase the revenue (net profit). The increase in net profit will have a direct impact (increase) on the retained earnings.

Detailed explanation-4: -If the company pays cash for a new delivery van, one asset (cash) will decrease and another asset (vehicles) will increase. If a company provides a service to a client and immediately receives cash, the company’s assets increase and the company’s owner’s equity will increase because it has earned revenue.

Detailed explanation-5: -Owner’s equity refers to the total value of the company that’s held in the hands of owners, including founders, partners, and stockholders. Retained earnings refer to the company’s net income or loss over the lifetime of the enterprise (subtracting any dividends paid to investors).