Question

Describe a transaction that would:a. Increase both an asset and capital stock.b. Increase both an asset and a liability.c. Increase one asset and decrease another asset.d. Decrease both a liability and an asset.e. Increase both an asset and retained earnings.f. Decrease both an asset and retained earnings.

Answer 1

Answer:

a. Increase both an asset and capital stock.

Issuance of common stock increases the cash as assets and common stock as a capital stock.

b. Increase both an asset and a liability.

Supplies purchased on account increases the Inventory as an asset and Increases the payable as a liabilities.

c. Increase one asset and decrease another asset.

Maturity of an Investment in debt instrument, Increases the cash as an asset and decreases the investment as another asset.

d. Decrease both a liability and an asset.

Payment to supplier decrease the account payable as a liabilities and cash as an asset.

e. Increase both an asset and retained earnings.

Cash Sales Increases the cash as an asset and Net profit as a retained earning.

f. Decrease both an asset and retained earnings.

Sales return decreases the account receivable as an asset and net profit as a retained earning.