Archives: Answers

Companies choose to merge with other companies for many reasons. First of all, mergers offer synergies and economies of scale. They can provide you with access to new products, to new markets or boost your market share and your authority (power). By merging with another company, companies are able to reduce the competition which shrinks the margins and reduces the profits. In addition, buying a successful company can have less risks that trying to start a new company or a new product from scratch. Of course, mergers can also go wrong! They are a lot of cases where the result was not what was expected due to different companies cultures, failure to organise and operate a larger organisation (more complex entity) or due to other reasons as well.

The trial balance is essentially a summary of your financial statements. At the year end, the accounts close and the balances are moved to the trial balance. After that, adjustments are posted and the result is usually called extended trial balance. This extended trial balance is the source for your balance sheet and the income statement. So, the balances that you see in the trial balance are moved to financial statement line items in the balance or in the income statement.

Chances are that you won’t see any disclosure for the drawings unless the drawings are substantial. The share equity is the capital contribution and the final figure that sits in the balance sheet is the initial contribution, plus any subsequent contribution less any drawings. So, what you see in the balance sheet as share capital includes the drawings (it is a debit so it reduces the share capital and also reduces your asset or increases your liability) but you will not see it as a separate line.

It depends on your gross income. The base amounts (tax free allowance) depends on your marital status. If your social security benefits plus your other income (from other sources) exceeds this base amount, then yes the social security benefits are taxable.

I assume by saying net worth, you mean net assets. Net assets is the total assets less the total liabilities which gives you the total equity based on the accounting equation. So yes, these two are exactly the same thing.

No, FDIC secures current, saving and other bank accounts. There are not investments per se. Investing in a mutual fund is a different story and FDIC does not insure these kind of investments. You should obtain adequate information for the risk profile of the fund you have invested your money in.