Question

decreases in equity (net assets) from peripheral or incidental transactions of an entity and from all other transactions and other events and circumstances affecting the entity during a period except those that result from expenses or distributions to owners

Answer 1

Equity decreases in peripheral or incidental transactions and all other transactions and events, excluding expenses or distributions to owners, affect a business's net assets.

Step-by-step explanation:

Equity represents the ownership interest or the net assets of a business. The question is referring to two types of decreases in equity:

1. Peripheral or incidental transactions: These are transactions that are not directly related to the main business activities. Examples include gains or losses on the sale of non-operating assets or investments.
2. All other transactions and events: This category includes any decreases in equity that do not result from expenses or distributions to owners. Examples include losses from natural disasters, impairments of assets, or changes in the value of financial instruments.

These decreases in equity are important to track and analyze as they can impact the overall financial health and stability of a business.