Question

When the amount paid for land is $36,000 and the amount paid for expenses is $10,000, the balance in total assets after transaction (b) is?

Answer 1

The balance in total assets after the transaction is $36,000. This is because expenses are not assets. An asset must have value, meaning that it can be either be sold, or that the consumption of it will garner income. Expenses such as taxes or legal fees cannot later be sold or consumed for income.