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Accounting equation: assets and liabilities

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For each of the following items, give an example of a business transaction that has the described effect on the accounting equation:

Increase an asset and increase a liability.
Increase one asset and decrease another asset.
Decrease an asset and decrease owner's equity.
Decrease an asset and decrease a liability.
Increase an asset and increase owner's equity.

Hints & Tricks:
Invest in a company $10,000 What would the journal entry be?
DR Cash 10,000 (increase assets) CR Capital 10,000 (increase owners equity)
What would be the journal entries when a company pays rent expense $400?
DR Rent Exp 400 (Decrease Owners Equity) CR Cash 400 (Decrease owners equity)
Earned $2,000 in revenue did not receive cash. What would be the journal entries?
DR A/R 2,000 (increase assets) CR REVENUE 2,000 (increase owners equity)
The company purchases supplies paying cash $200
What would the journal entries be?
DR Supplies 200 (Increase Assets) CR Cash 200 (Decrease Assets)
Paid $300 in wages expense
What are the journal entries
DR Wages Exp 300 (Decrease Owners Equity) CR Cash 300 (Decrease Asset)
Purchased equipment on account for $12,000
What are the journal entries?
DR Equipment 12,000 (increase asset) CR A/P 12,000 (increase liability)
The company pays the A/P off. What are the journal entries?- DR A/P 12,000 (decrease liabilities) CR Cash 12,000 (decrease asset)
The owner withdrew $1,000 in cash.
What are the journal entries?
DR Drawing 1,000 (decrease owners equity) CR Cash 1,000 (decrease assets)
The owners equity account is made up of 4 types of accounts
Revenue and Capital increase the Owners Equity account and Expenses and Drawing decrease the Owners Equity account
Receive $500 in cash for revenues earned
DR Cash 500 CR Revenue 500
Invested $10,000 in cash
DR Cash 10,000 CR Capital 10,000
Paid expenses $200
DR Expense 200 CR Cash 200
Withdrew $900 in cash
DR Drawing 900 CR Cash 900

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Solution Summary

The solution gives an example of a business transaction that has the described effect on the accounting equation:
Increase an asset and increase a liability.
Increase one asset and decrease another asset.
Decrease an asset and decrease owner's equity.
Decrease an asset and decrease a liability.
Increase an asset and increase owner's equity.

Solution Preview

For each of the following items, give an example of a business transaction that has the described effect on the accounting equation:

Increase an asset and increase a liability.
Increase one asset and decrease another asset.
Decrease an asset and decrease owner's equity.
Decrease an asset and decrease a liability.
Increase an asset and increase owner's equity.

1) Increase an asset and increase a liability.

Increase asset by increasing inventory.
Buying supplies (worth $100) would increase inventory (an asset).
If you buy these supplies on credit you increase a liability (accounts payables)
Journal entries:
Dr Inventory 100 Cr Accounts Payable 100

Another example from the hints and tips

Purchased equipment on ...

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