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3 years ago

Select a transaction that effects the accounting equation as follows:________

Business

1 answer:

faltersainse [42]3 years ago

8 0

Answer:

A. The company pays cash toward an account payable.

Decreases an asset and decreases a liability.

B. The company purchases equipment on credit.

Increases an asset and increases a liability.

C. The owner invests cash in the business in exchange for its common stock.

Increases an asset and increases equity.

D. The company pays cash dividends to shareholders.

Decreases an asset and decreases equity.

E. The company purchases supplies for cash.

Increases an asset and decreases an asset.

F. The company provides services for cash.

Increases an asset and decreases an asset.

Explanation:

A. The company pays cash toward an account payable.

Decreases an asset and decreases a liability.

When a company pays cash - an asset is decreasing because cash is a current asset and it is flowing out; while 'account payable' which is a current liability, is being settled - hence reducing

B. The company purchases equipment on credit.

Increases an asset and increases a liability.

When a company purchases equipment on credit - an asset is increasing because equipment is a fixed asset and it is coming in; while 'account payable' which is a current liability, is being generated - hence increasing

C. The owner invests cash in the business in exchange for its common stock.

Increases an asset and increases equity.

When a company owner invests into the business - an asset is increasing because cash is a current asset and it is coming in; while 'Equity' which is common stock, is being generated - hence increasing

D. The company pays cash dividends to shareholders.

Decreases an asset and decreases equity.

When a company pays dividends - an asset is decreasing because cash is a current asset and it is going out; while 'retained earnings' which is part of equity, is being reduced.

E. The company purchases supplies for cash.

Increases an asset and decreases an asset.

When a company purchases supplies on credit - an asset is increasing because 'inventory' is a current asset and it is coming in; while 'cash' which is also an asset, is being paid out - hence decreasing

F. The company provides services for cash.

Increases an asset and decreases an asset.

When a company provides service for cash - an asset is increasing because cash which is a current asset is coming in; while 'cash' which is a current asset, is being paid out at the same time for salaries to employees who rendered the service to the client - hence decreasing

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Explanation:

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3 years ago

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Answer:

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Explanation:

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3 years ago

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2 years ago