Purchase Solution

Why is stockholders' equity increased?

Not what you're looking for?

Ask Custom Question

Explain why stockholders' equity is increased by revenues and decreased by expenses. What other items increase or decrease stockholders' equity?

Purchase this Solution
Solution Summary

The solution discusses why is stockholders' equity increased.

Solution Preview

Stockholders equity essentially refers to the value of a company. When a company takes in revenues from selling an item, those revenues in essence grow stockholders equity. Conversely, when a company makes a purchase, the money that is used to pay for that purchase would come from the company's equity and would thus reduce the amount of equity on hand. To illustrate this scenario, ...

Purchase this Solution
Free BrainMass Quizzes
Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.

Transformational Leadership

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.

Writing Business Plans

This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.

Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.

Marketing Management Philosophies Quiz

A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.

View More Free Quizzes
Related BrainMass Solutions

  • Question about Basic accounting equation

    (a) If total assets increased $150,000 during the year and total liabilities decreased $80,000, what is the amount of stockholders' equity at the end of the year?

  • Easy transfer of ownership is a characteristic of which form

    (a) If total assets increased $151,747 during the year and total liabilities decreased $76,550, what is the amount of stockholders' equity at the end of the year?

  • Financial Statement Analysis: Profits, sales, assets,

    332426 Financial Statement Analysis: Profits, sales, assets, stockholders' equity; ratios, trends 1. Profits might be compared to sales, assets, or stockholders' equity. Why are all three of these useful?

  • BE 1-7, BE 1-8, BE 1-9 Cummings Company, Haldeman Company

    (b) During the year, total liabilities increased $100,000 and stockholders' equity decreased $70,000. What is the amount of total assets at the end of the year?

  • Wine Company Assets

    (2) During the year, total liabilities increased $500,000 and stockholders' equity decreased $200,000. What is the amount of total assets at the end of the year?

  • Discussion on changes in Stockholders' equity

    227515 Discussion on changes in Stockholders' equity Please write (3-5 sentences) on why that the statements below is true: 1.If I invest $100 of cash and nothing more. I increase both owners' equity and assets (cash) by $100.

  • Capital Lease: JK Company.

    , long-term debt=130,000, and stockholders equity=150,000.

  • General Accounting Questions

    d. decreases stockholders' equity by $600. 3. A corporation with total stockholders' equity of $85,000 paid a $5,000 business debt. As a result of this transaction, total stockholders' equity a. did not change. b. increased by $5,000.

  • Microsoft's working captial, current ratio,acid-test ratios

    In fiscal 2004, dividends were increased to $0.16 per share, for a total of $1,729 million. What do you think was the primary reason for Microsoft's "no dividends" policy, and why has that policy been changed in recent years? h.

View More Related Solutions