ILLUSTRATIVE EXAMPLES

Example $1$

Mr Hayne, the owner of Prima Innovations, invests R$140000$ in order to start his business. Owner's equity is therefore R$140000.$ He also approaches a bank which lends him R$100000.$ Liabilities are therefore R$100000.$

Owner's equity R$140000)+$ Liabilities R$100000)=$ R$240000$

What happens to this R$240000?$