If the assets of a business are 107K and the owner's equity is 75K does the owner's investment equal 182K?

In pure accounting terms Assets - Liabilities = Owner's equity. That means that if you have 107k of assets and 75k of OE, you have 32K of liabilities Good accounting answer...in general terms, count up what you own (Assets), subtract what you owe(liabilities) and that is what you are worth (equity), so if you own 107K and are worth 75K, then you owe 32K Answer I agree with the above, and the basics of Accounting provided But it addresses what the owners equity is -- that is the amount of value on the companies books after all claims are made/paid The question asks what is the owners investment equal to. That is almost always different than owners equity.

The owners investment is viewed from the owners side bookkeeping, not the business side. It is entirely possible to buy stock in a company for say $100...that is the owners investment....it doesn't change based on anything to do with the books or operations of the company - since he isn't investing more (or taking anything out - barring dividends and such for the moment) Say then the company has good (or bad) fortunes (or the stock market and investment marketplace changes)...and he sells his investment for a different amount...the difference is the gain or loss on the owners investment The owners equity portion of the business books could have gone up, down (or stayed the same). Same holds true if it was 100% of the biz instead of just some portion of stock in it So in the question above, we don't know what the owners investment is, nor can we determine it from the companys books and records.

In pure accounting terms Assets - Liabilities = Owner's equity. That means that if you have 107k of assets and 75k of OE, you have 32K of liabilities. Good accounting answer...in general terms, count up what you own (Assets), subtract what you owe(liabilities) and that is what you are worth (equity), so if you own 107K and are worth 75K, then you owe 32K.

I agree with the above, and the basics of Accounting provided. But it addresses what the owners equity is -- that is the amount of value on the companies books after all claims are made/paid. The question asks what is the owners investment equal to.

That is almost always different than owners equity. The owners investment is viewed from the owners side bookkeeping, not the business side. It is entirely possible to buy stock in a company for say $100...that is the owners investment....it doesn't change based on anything to do with the books or operations of the company - since he isn't investing more (or taking anything out - barring dividends and such for the moment).

Say then the company has good (or bad) fortunes (or the stock market and investment marketplace changes)...and he sells his investment for a different amount...the difference is the gain or loss on the owners investment. The owners equity portion of the business books could have gone up, down (or stayed the same). Same holds true if it was 100% of the biz instead of just some portion of stock in it.

So in the question above, we don't know what the owners investment is, nor can we determine it from the companys books and records.

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