Purchase Solution

Transaction Analysis and the Basic Accounting Equation

Not what you're looking for?

Ask Custom Question

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
Change and Resistance within Organizations

This quiz intended to help students understand change and resistance in organizations

Marketing Management Philosophies Quiz

A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.

Writing Business Plans

This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.

Employee Orientation

Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.

Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.