(1)

You are the accountant for XYZ Company. You prepared the financial position statement for XYZ on 31/12/2020 as follows: Assets Liabilities Cash 8,000 A/P 3,000 A/R 14,000 Equity Equipment 20,000 Capital 30,000 RE 9,000 Total Assets 42,000 Total Lia. &Equ. 42,000 One of the shareholders, who doesn't have any accounting background, was wondering about the equity section (capital 30,000 and R.E 9,000). He was confused as to why the total of the equity section is 39,000 while the cash available is only 8,000. How would you answer him