Transaction Analysis and the Basic Accounting Equation
Not what you're looking for?
For the following transactions, indicate how each immediately affects the basic accounting equation and what other effects there will be in the future as a result of the transaction:
d) pay rent in advance for a warehouse
g) sign warrenty agreements with customers that cover products that were sold to them
h) buy a patent for a new production process
Purchase this Solution
Solution Summary
This problem shows how the basic accounting equation will be impacted if the firm makes advance payment for the rent or sign warranty agreements or buy patents. The solution takes all possible ways of completing these transactions such as purchasing for cash or purchasing for credit.
Solution Preview
Equation is
Assets = Liabilities + Owner's Equity
d) Pay rent in advance
Assets side
Increase in pre-paid expenses towards rent
Decrease in cash
Liability side
No change
Implications for future: at the end of the advance period the pre-paid rent will be recognized as expenses
Asset side
Decrease pre-paid expenses on asset side
Liability Side
Decrease owner's equity (expense decrease the owner's equity and revenues increase ...
Purchase this Solution
Free BrainMass Quizzes
Motivation
This tests some key elements of major motivation theories.
Cost Concepts: Analyzing Costs in Managerial Accounting
This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.
Lean your Process
This quiz will help you understand the basic concepts of Lean.
Business Processes
This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.
Basic Social Media Concepts
The quiz will test your knowledge on basic social media concepts.