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23 December, 21:45

You are reviewing the Client Overview tab for a new client to determine the scope of a bookkeeping clean-up engagement. You notice that there is a large amount in the Opening Balance Equity account. Which 3 reasons could be causing this balance?

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  1. 24 December, 01:15
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    See explanation section

    Explanation:

    Three reasons could be causing the opening equity balance high, and those are -

    1. Issuing more common stock is one of the significant reasons for the company that causes a large amount in the opening balance of the equity account.

    2. Issuing excess preference stock to involve the investors can be the other reason to get a higher amount of beginning equity balance.

    3. Making much profit for the prior years, and keeping them with the retained earnings without expanding the business can be the third reason.
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