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Business Transaction and its effect on accounting equation

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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.

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Solution Summary

The solution gives 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.

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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.

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

Purchased equipment ...

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