The general manager of a business encounters many different types of business transactions. Provide an example of a transaction that would describe the effect on the accounting equation. Each situation is independent of the other situations.
a. The transaction would increase an asset account and increase a liability account.
b. The transaction would decrease an asset account and decrease the owner’s equity account.
c. The transaction would increase an asset account and increase owner’s equity account.
d. The transaction would decrease an asset account and decrease a liability account.
e. The transaction would increase one asset account and decrease another asset account.
f. The transaction would decrease one liability account and increase another liability account.
What ideas do you have?
IWAS THINKING NO OVERDRAFTS, INSUFFIENT FUNDS, MORE MONEY IN THE ACCOUNTS,
Which of these scenarios meets the criteria in your questions?
that is what ineeded help with i was not sure where to put my answers
This site may help you sort it out.
(Broken Link Removed)
A. If you would buy a machine and had to pay payments on it that would increase the asset and liability accounts.
B. If you had to use an asset for an expense it would decrease both asset and owners equity account.
C. If you were to sell a property that you owned it would increase both asset and owners equity.
D. Since assets=liability + owners equity if you took the liability out of the equation then it would decrease both.
To determine which scenario meets the criteria in the question, we can analyze each option and see if it fits the description.
a. Transaction increasing an asset account and increasing a liability account:
An example of this transaction could be borrowing money from a bank. This increases the business's cash (asset) and also increases the business's liabilities (the borrowed amount).
b. Transaction decreasing an asset account and decreasing the owner’s equity account:
An example of this transaction could be the owner withdrawing cash from the business for personal use. This decreases the business's cash (asset) and also decreases the owner's equity in the business.
c. Transaction increasing an asset account and increasing owner’s equity account:
An example of this transaction could be the business selling goods or services and receiving cash. This increases the business's cash (asset) and also increases the owner's equity.
d. Transaction decreasing an asset account and decreasing a liability account:
An example of this transaction could be the business making a payment to repay a loan. This decreases the business's cash (asset) and also decreases the business's liabilities (the loan amount).
e. Transaction increasing one asset account and decreasing another asset account:
An example of this transaction could be exchanging one type of asset for another. For instance, if the business trades in an old equipment for a new one, the specific asset accounts associated with these items would change.
f. Transaction decreasing one liability account and increasing another liability account:
An example of this transaction could be refinancing a loan. The business might repay an existing loan (decreasing the liability) and take a new loan to replace it (increasing a different liability).
Based on the descriptions, scenario a. (increasing an asset account and increasing a liability account) meets the criteria in the question.