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Would an "Investment of twenty thousand dollars" be the same as "Increase in Owner's Equity?"


Would an "Investment of twenty thousand dollars" be the same as "Increase in Owner's Equity?"

Not really.

For instance if you use $20,000 cash to buy land, you would

Debit - Land
Credit - Cash

Does that make sense?

Are we talking real estate? If so, then yes, adding $20k to your down payment will have the effect of adding $20k to your equity.

If you're referring to real estate, and all $20k goes towards the PRINCIPLE (not interest), then yes - it is an increase in owner's equity - of course, contingent upon your ability to sell the property at or above what you purchased it for. if you sell it for a loss, you could lose all or part of the $20k. For example - you buy a property for $100k. You pay $20k towards the principle... now you owe $80k. You then turn around and sell the place for $50k... In essence, you'd have lost $50k (of which $20k was your initial payment towards the principle). If you sold for $100k... (assuming no closing costs to make things simple), you would just make a wash sale... no profit... no loss... you get your $20k back, in essence.

perhaps you can try forex. which is also excellent way for you to invest.

The FOREX or Foreign Exchange market is the largest financial market in the world, with an volume of more than $1.5 trillion daily, dealing in currencies. Unlike other financial markets, the Forex market has no physical location, no central exchange. It operates through an electronic network of banks, corporations and individuals trading one currency for another.

try forex from here:

http://www.bernanke.cn/easy-forex/

Good Luck && Wish you make a fortune!

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