Question

Olive Enterprises experienced the following events during Year 1: Acquired cash from the issue of common stock. Paid cash to reduce the principal on a bank note. Sold land for cash at an amount equal to its cost. Provided services to clients for cash. Paid utilities expenses with cash. Paid a cash dividend to the stockholders.

Answer 1

Answer:

THIS IS THE COMPLETE QUESTION:

Olive Enterprises experienced the following events during Year 1

1. Acquired cash from the issue of common stock.

2. Paid cash to reduce the principal on a bank note.

3. Sold land for cash at an amount equal to its cost.

4. Provided services to clients for cash.

5. Paid utilities expenses with cash.

6. Paid a cash dividend to the stockholders.

Explain how each of the events would affect the accounting equation by writing the letter I for increase, the letter D for decrease, and NA for does not affect under each of the components of the accounting equation.

1)ANSWER: the events that would affect the accounting equation in question (1) is as follows

✓Assets (I)

✓Liabilities (NA)

✓Equity (I)

2.)ANSWER: the events that would affect the accounting equation in question (2) is as follows;

✓Assets (D)

✓Liabilities (D)

✓ Equity (NA)

3. )ANSWER: the events that would affect the accounting equation in question (3) is as follows;

✓Assets (D)

✓ Liabilities (D)

✓Equity (NA)

4. ) ANSWER: the events that would affect the accounting equation in question (4) is as follows;

✓Assets (I)

✓Liabilities (NA)

✓Equity (I)

5. )ANSWER: the events that would affect the accounting equation in question (5) is as follows;

✓Assets (D)

✓ Liabilities (NA)

✓ Equity (D)

6) ANSWER: the events that would affect the accounting equation in question (6) is as follows;

✓Assets (D)

✓ Liabilities (NA)

✓Equity (D)

EXPLANATION:

The accounting equation gives how

assets, liabilities as well as equity relate with each other, which are elements of a balance sheet. This can be expressed below as

Assets = (Liabilities + Equity)

✓ liabilities are what the company is owning which can be money, examples are loans, accounts payable as well as mortgages.

✓Assets can be regarded as properties that are been owned by a company. This could be fixed assets,inventories

✓equity can be explained as when a company/ organization own an asset but is having some debts associated with it, it is difference between value of the assets and liabilities.