Question

For each of the transactions in items 2 through 13, indicate the two (or more) effects on the accounting equation of the business or company..The owner invests personal cash in the business.AssetsIncrease Decrease No EffectLiabilitiesIncrease Decrease No EffectOwner's (or Stockholders') EquityIncrease Decrease No Effect

Answer 1

Answer:

2. The owner invests personal cash in the business.

Assets: Increase  

Liabilities: No Effect

Owner's (or Stockholders') Equity: Increase

3. The owner withdraws cash from the business for personal use.

Assets: Decrease

Liabilities: No Effect

Owner's (or Stockholders') Equity: Decrease

4. The company receives cash from a bank loan.

Assets: Increase

Liabilities: Increase

Owner's (or Stockholders') Equity: No Effect

5. The company repays the bank that had lent money to the company.

Assets: Decrease

Liabilities: Decrease

Owner's (or Stockholders') Equity: No Effect

6. The company purchases equipment with its cash.

Assets: one increases and another decreases, but it total assets don't change

Liabilities: No Effect

Owner's (or Stockholders') Equity: No Effect

7. The owner contributes his/her personal truck to the business.

Assets: Increase  

Liabilities: No Effect

Owner's (or Stockholders') Equity: Increase

8. The company purchases a significant amount of supplies on credit.

Assets: Increase

Liabilities: Increase

Owner's (or Stockholders') Equity: No Effect

9. The company purchases land by paying half in cash and signing a note payable for the other half.

Assets: Increase

Liabilities: Increase

Owner's (or Stockholders') Equity: No Effect

10. In May, Company X records the transaction by a debit to Accounts Receivable for $5,000 and a credit to Service Revenues for $5,000. What is the effect of this entry upon the accounting equation for Company X?

Assets: Increase

Liabilities: No Effect

Owner's (or Stockholders') Equity: Increase

11. In June, Company X receives the $5,000. What is the effect on the accounting equation and which accounts are affected at Company X?

Assets: No Effect

Liabilities: No Effect

Owner's (or Stockholders') Equity: No Effect

12. What is the effect on Client Q's accounting equation in May when Client Q records the transaction as a debit to Consultant Expense for $5,000 and a credit to Accounts Payable for $5,000?

Assets: No Effect

Liabilities: Increase

Owner's (or Stockholders') Equity: Decrease

13. What is the effect on Client Q's accounting equation in June when Client Q remits the $5,000? Also, which accounts will be involved?

Assets: Decrease

Liabilities: Decrease

Owner's (or Stockholders') Equity: No Effect