* Equity:

When an entrepreneur comes up with an idea or product, that potentially will generate income; it is the beginning of a new business. In many cases they get developed in places out of our imagination (garages, back yards, home offices, etc.) Many factors and resources get involved into the initial process of developing a new business. Time and time again they use cash, new or used equipment and many other available tools. The combination of all of them generates the original value; that becomes what we call the initial investment. Let assume that the initial product or service is in place and ready for the consumer. Up to this point any entrepreneur knows how he got here, but the question is how do I assess all of this into my books? Well, as simple as this; let’s put on the table all the facts. Hypothetically speaking the following were the initial investment/expenses that started this new enterprise, of course we are not getting complicated with deep transactions. “John our client” in an “X” period of time developed a product, initially he bought a piece of equipment for $500.00, has some expenditures that we will classify as miscellaneous expenses in the amount of $200.00. To give it an initial boot, he took $3000.00 from his personal saving and opens the company’s bank account. Total amount used up to this point accounts for $3,700.00 and this is how gets posted in to the accounting books: