Identify a business or personal financial transaction. (You can choose any one y

Question

Identify a business or personal financial transaction. (You can choose any one you like, it doesn't have to be one in the textbook). Then answer the following questions which should result in correctly identifying the accounts to be debited and credited: REQUIRED: 1) What are the specific accounts that are affected? (i.e. Cash, Accounts Receivable, Land, etc.) REMEMBER THAT THERE MUST BE AT LEAST 2 SPECIFIC ACCOUNTS AFFECTED. 2) What BROAD type of Account do they belong to? (i.e. Asset, Liability or Equity) 3) Does this transaction result in an INCREASE or DECREASE to the account(s) in #2 above? 4) Using the rules for Debits and Credits identify which SPECIFIC ACCOUNT (#1) is to be debited and which is to be credited. REMEMBER: 1. ASSETS are on the LEFT side of the accounting equation and therefore they INCREASE on the LEFT, DEBIT SIDE; LIABILITIES AND EQUITY are on the RIGHT SIDE of the equation and therefore they INCREASE on the RIGHT, CREDIT side. 2. TOTAL DEBITS MUST EQUAL TOTAL CREDITS!

Explanation / Answer

Choose Personal financial transaction:

1. What are specific accounts to be affected ?

Answer: Cash and Land

2. What broad type of account do they belong to ?

Answer: Asset and Equity

3. Does this transaction result in an Increase or Decreae to the account(s) in #2 above ?

Answer: Assets account increased and Equity account decreased

4. Using the rules for Debits and Credits identify which specific account #1 to be debited and which account is be credited ?

Answer: Land account Debited and Cash Account credited.

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