23.03.2023 - 10:30

Mr. Decker invested 20,000 dollars in cash in his new business. How does the company record the investment?

Question:

Mr. Decker invested {eq}$20,000 {/eq} in cash in his new business. How does the company record the investment?

Answers (1)
  • Sallie
    April 18, 2023 в 15:26
    The company should record the investment as a liability on its balance sheet since Mr. Decker's investment increases the company's total equity. To be more specific, it should be recorded as "Owner's Equity - Capital Contribution" or "Capital Stock" depending on the type of ownership structure the company has. This recording method ensures that the company keeps proper track of the funds invested by Mr. Decker and also allows the company to accurately report its financial standing to investors, lenders, and other interested parties.
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