9 Transaction analysis LO2 The following is a list of independent economic event

Question

9 Transaction analysis LO2 The following is a list of independent economic events: i Purchased inventory on account ii Paid dividends at the end of the year. iii Received cash in payment for services iv Issued shares (contributed equity) for cash. v Paid rent in cash vi Received a bill for electricity used. vii Bought equipment for cash viii Billed customers for services. Required to make consistent with other answer formats change to a Indicate the accounts that would be affected by each transaction. Indicate whether each transaction increases, decreases, or has no effect on assets, labilities and shareholders' equity b

Explanation / Answer

transactio no. Accounts affected Effect on account

1) purchases account- increase ie increase in inventory ie assets

creditors a/c inrease- increase in liabilities

2) dividennd a/c dr

to cash ie decrease in assets ie cash

3) cash a/c dr

to revenue so increase in cash ie assets

4) cash ie assets increase. and share capital increase

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