You are starting your own restaurant business and have perso

You are starting your own restaurant business and have personally saved $100,000 over the years to invest in it.

You really need $200,000 in total cash to purchase everything you need prior to opening this restaurant.

Question(s):

Please list some assets and liabilities you will need to buy or establish prior to opening your restaurant.

Please describe what type of expenses may be necessary (to incur) prior to opening the restaurant.

Please describe how these assets, liabilities and expense affect owner’s equity in your company’s books.

Solution

Please list some assets and liabilities you will need to buy or establish prior to opening your restaurant.:

Assets: Furniture, Crockery, Air conditioner, Card, Invoice machine, Swap machine

Liabilities: Loan liability of cash borrowed

Please describe what type of expenses may be necessary (to incur) prior to opening the restaurant.

Renting of premises, Interior decoration of premises, Salary of employees, Training to staff etc

Please describe how these assets, liabilities and expense affect owner’s equity in your company’s books.

Assets will increase the owner\'s equity whereas expenses and liabilities will decrease the owners equity.

Cash and Loan will help to buy Assets, but on the other hand liability of Loan would exist and expenses would reduce the capital.