Financial Accounting Standards Board (FASB) has listed the following characteristics of equity: 1. Equity in a business enterprise stems from ownership rights. It involves a relation between an enterprise and its owners as owners rather than as employees, suppliers, customers, lenders or in some other non-owner role. Since it ranks after liabilities as a claim to or interest in the [...]
The following points highlight the top five theories of equity. The theories are: 1. Proprietary Theory 2. Entity Theory 3. Fund Theory 4. Residual Equity Theory 5. Enterprise Theory. 1. Proprietary Theory: Under the proprietary theory, the entity is the agent, representative, or arrangement through which the individual entrepreneurs or shareholders operate. In this theory, the viewpoint of the owners [...]
In this article we will discuss about the transactions and events that change equity. The transactions and events that influence or do not influence equity have been displayed in the Exhibit 7.1. In this Exhibit class B shows the sources of changes in equity and distinguishes them from each other and from other transactions, events and circumstances affecting an enterprise [...]