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Business Transactions

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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 explains the business transactions that would result in the given effects on the accounting equation.

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Increase an asset and increase a liability.
When you borrow money, cash(asset) increases and bank borrowings (liability) increase

Increase one asset and decrease another asset.
When accounts receivable are collected - cash (asset) is ...

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