Reduction of its responsibility to safeguard the proprietary interest in consideration for money or property parted with

Reduction of its responsibility to safeguard the proprietary interest in consideration for money or property parted with

Illustrative example for money parted with:

On June 27, 20x2, AAA Company gave P3,000.00 to Alec A. Agustin, the proprietor, for his personal use.

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: reduction of the company's responsibility to safeguard the proprietary interest

• The value parted with by the company:  money

Explanation:

The value received by AAA Company is the reduction of its responsibility to safeguard the proprietary interest.  In exchange, AAA Co. valued parted with is the money.

Therefore, in this transaction, the value received is the reduction of the company's responsibility to safeguard the proprietary interest and the value parted with is the money.


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Illustrative example for property parted with:

On June 18, 20x2, Alec A. Agustin, the proprietor of AAA Trucking Services Company, took home a laptop worth P35,000.00 for personal his use.

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:  reduction of the company's responsibility to safeguard the proprietary interest

• The value parted with by the company:  property (laptop)

Explanation:

The value received by AAA Company is the reduction of its responsibility to safeguard the proprietary interest.  In exchange, AAA Co. valued parted with is its laptop.

Therefore, in this transaction, the value received is the reduction of the company's responsibility to safeguard the proprietary interest and the value parted with is the money.


Click here to see the recording and accounting of the above transaction