Illustrative example for money received:
On June 22, 20x2, AAA Company received cash from Alec A. Agustin, the proprietor, P100,000.00 as additional capital of the business.Analysis and Explanation:
Note: when analyzing a business transaction, the bookkeeper or analyst must look at the side or perspective of the company.
Analysis:
- The value received by the company: money
Explanation:
- The value parted with by the company: implied promise to safeguard the proprietary interest.
The value received by AAA Company is the money. In exchange, AAA Co. the value parted with is the implied promise to safeguard the proprietary interest.
Therefore, in this transaction, the value received is the money and the value parted with is the implied promise to safeguard the capital of the proprietor.
Click here to see the recording and accounting of the above transaction
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Illustrative example for property received:
On June 13, 20x2, AAA Company received a second hand elf truck worth P400,000.00 from Alec A. Agustin, the proprietor, for use in the business.Analysis and Explanation:
Note: when analyzing a business transaction, the bookkeeper or analyst must look at the side or perspective of the company.
Analysis:
- The value received by the company: car
Explanation:
- The value parted with by the company: implied promise to safeguard the proprietary interest
The value received by AAA Company is a form of property - the car. In exchange, AAA Co. value parted with is the implied promise to safeguard the proprietary interest. The car increases the capital because it represents a capital contribution.
Therefore, in this transaction, the value received is the car and the value parted with is the implied promise to safeguard the proprietary interest.
Click here to see the recording and accounting of the above transaction
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