Posted on November 1, 2011.
Let's say a company has had at The Beginning of year
$ 100 in Cash
$ 100 in Inventories
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$ 200 Total Current Assets in
$ 100 until deficiency in Equipment
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$ 300 in Total Assets
That assumes Throughout The Year, There Is No business activity.
So did The End of the Year There Is Still $ 100 in cash, $ 100 in inventoried, But The equipment until deficiency has Dropped to $ 70 (Assuming a rate of amortization 30%).
So did The End of the Year We Have
$ 270 - Total Assets
Assets are now Supposed To Be Equal to Liabilities + Equity ("Balance Sheet Equation").
Since no activity has been "There, There Is No changes in equity Liabilities gold.
How does the Balance Sheet equation work out at The End of the Year?
