What does decreasing total assets mean, and how do you understand a decrease in negative equity, tha

Assets are divided into current assets and non-current assets, the increase in total assets is also the increase in these two sides, assets = liabilities + owners' equity is the basic accounting equation in assets = equity, assets indicate the existence and distribution of resources in the enterprise, and equity indicates the channels for the acquisition and formation of resources.

An increase in assets means an increase in liabilities or owners' equity.

The increase in liabilities means that the asset-liability ratio of the enterprise is increasing, and the asset-liability ratio is a lever for the enterprise to adjust its financial management, and there should be a ratio between borrowing and shareholder investment. The generally low asset-liability ratio indicates that the company's financial costs are low, the risk is small, the solvency is strong, the operation is relatively stable, and the attitude towards investment behavior is more prudent. However, for enterprises, the change of indicators is tormented, indicating that the use of less own capital investment to form more assets for production and operation, not only to expand the scale of production, but also to use the principle of financial leverage to obtain more investment profits, however, there are also professionals who believe that the general low asset-liability ratio indicates that the operation of enterprises tends to be cautious.

From an accounting point of view, it is not normal for the debt-to-asset ratio to be too low or too high.

An increase in owner's equity indicates an increase in the equity and retained earnings invested by the owners of the business, and an increase in the profit of the business.

The 'cash flow from empirical activities' you refer to mainly reflects the good cash inflow and outflow of the company's main operating business, but the decrease in accounts receivable and payable.

This may mean that your company's business mode is changing from "expansionary" to "conservative", but it does not mean that the company's operation is not good.

In order to achieve an increase in the total amount of assets, and at the same time, the "cash flow from operating activities" in the cash flow statement is positive, mainly in two aspects:

1 Reduce or stop the input of fixed assets, when the depreciation of the assets is part of the cost but not the actual expenditure, and it is converted into cash flow.

2 Increase share capital or borrow funds.

Bad debts are incurred.

The accounts receivable were determined to be uncollectible, and the asset needed to be turned into a loss, and the loss increased, which decreased for the accounts receivable, so it was credited.

According to the allowance method, the loss has been increased long ago, and at the same time reflected in the bad debt provision account, the bad debt provision account indicates the loss that has been prepared, that is, the amount of loss that you can deduct, and now the actual loss has occurred, the deductible loss amount has been used, and the remaining can be used less, so it is also reduced.

The above analysis is the actual situation.

Theoretically, the accounts receivable account is an asset account, the credit side indicates that the provision account for reducing bad debts is the allowance account of the asset class, and the debit side indicates a decrease in the allowance, which is an increase for the asset (the decrease in allowance means that the decrease in negative assets means that the increase in assets).

The key points in the analysis of this question are:

The bad debt provision account is a contra account (i.e., negative equity) of the asset class