Answer to Question #155074 in Accounting for Priya

Question

Presented below are eight business transactions. Indicate the effect of each transaction on each element of the accounting equation.

(a)Purchased $296 of supplies on account.

(b)Performed $501 of services on account.

(c)Paid $345 of operating expenses.

(d)Paid $296 cash on account for the supplies purchased in item (a) above.

(e)Invested $1,080 cash in the business.

(f)Owner withdrew $386 cash.

(g)Hired an employee to start working the following month.

(h)Received $501 from a customer who had been billed previously in item (b) above.

(i)Purchased $489 of equipment in exchange for a note payable.

Answer 1

a) inventory increases and accounts payable increases

b) sales increases and accounts receivable increases

c) expenses increases and cash decreases

d) accounts payable decreases and cash increases

e) investment in equity increases and cash increases

f) cash decreases and others in equity increases with negative sign

g) nothing change

h) cash increases and accounts receivable decreases

i) a note payable decreases and equipment increases