How is owner equity calculated in a service-oriented business?
If a person is, say.
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Takes out $10,000 to start her business.
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By January of 2nd year is successful enough to pay all her bills AND take home $20,000 to live one (but still owes $5,000 on her debt. )
Is her owner equity -$5,000?
There aren't too many real estate firms that are starting out that keep a balance in their business checking accounts- they take the money out to live on.
If she wanted to get a loan, how would she show her balance sheet as looking worthwhile?
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