Dec 31 Management Services ....................................$1875
To Prepaid Expenses.....................................................$1875
(Being prepaid expenses recognised for the year)
Answer:
III. I, II, III, and IV.
- I. It is part of the double-entry procedure that keeps the accounting equation in balance.
- II. It represents a decrease to assets.
- III. It represents an increase to liabilities.
- IV. It is on the right side of a T-account.
Explanation:
The debit-credit balance is necessary for maintaining the accounting equation in balance, i.e. all the debits must have a corresponding credit.
Asset accounts increase when they are debited and decrease when they are credited.
Liabilities accounts decrease when they are debited and increase when they are credited.
Debits are on the left side of a t-account and credits are on the right side.
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Answer:
1. The government could not finance it's deficit budget.
2. The Dollar was stable and Through dollar adoption, interest rate would be lowered and investments would increase.
Explanation:
The colon was changed to dollars because El Salvador wanted a boost in it's economy through the US Dollar.
Printing money to finance deficit would no longer be done by the government and inflation would be brought under control. Because of the adoption El Salvador has no control over it's monetary policy.
the government would still be able to run deficits by printing money
with dollars, shocks caused by demand in the economy will be offset more effectively by using monetary policy.
By printing U.S. dollars, the government would still be able to finance deficits.
