2 . For each of the following items indicate whether the transactions listed bel
ID: 2432591 • Letter: 2
Question
2. For each of the following items indicate whether the transactions listed below increased (+), decreased (–) or had no effect (0) by inserting the appropriate symbol.
?
Net
Income
Assets
Liab.
Owners'
Equity
Cash
Flows
a.
Sold equipment for cash at a gain
b.
Recorded amortization expense on patents
c.
Paid cash for minor repairs to an asset
d.
Recorded a revenue expenditure incurred on account
e.
Paid cash to remove old building from land being prepared for use
Net
Income
Assets
Liab.
Owners'
Equity
Cash
Flows
a.
Sold equipment for cash at a gain
b.
Recorded amortization expense on patents
c.
Paid cash for minor repairs to an asset
d.
Recorded a revenue expenditure incurred on account
e.
Paid cash to remove old building from land being prepared for use
Explanation / Answer
increased (+), decreased (–) or had no effect (0) by inserting the appropriate symbol.
?
Net Income
Assets
Liabilities
Owners'Equity
Cash Flows
a.
Sold equipment for cash at a gain
+
(gain)
+
(Cash)
+
(Retained earnings)
b.
Recorded amortization expense on patents
--
(Expense)
--
(Patent)
--
(Asset decrease)
c.
Paid cash for minor repairs to an asset
--
(Expense)
----
(Cash)
--
(Asset decrease)
d.
Recorded a revenue expenditure incurred on account
--
(Expense)
+
(Since it is on account)
--
(Liability increased)
e.
Paid cash to remove old building from land being prepared for use
0
(Land value increase nullifies Cash decrease)
0
(Land increases nullifies cash decrease)
Owners equity = Assets - Liabilities
Net Income
Assets
Liabilities
Owners'Equity
Cash Flows
a.
Sold equipment for cash at a gain
+
(gain)
+
(Cash)
0+
(Retained earnings)
+b.
Recorded amortization expense on patents
--
(Expense)
--
(Patent)
0--
(Asset decrease)
0c.
Paid cash for minor repairs to an asset
--
(Expense)
----
(Cash)
0--
(Asset decrease)
--d.
Recorded a revenue expenditure incurred on account
--
(Expense)
0+
(Since it is on account)
--
(Liability increased)
0e.
Paid cash to remove old building from land being prepared for use
00
(Land value increase nullifies Cash decrease)
00
(Land increases nullifies cash decrease)
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