Indicate the effect each of the following transactions has on the accounting equ

Question

Indicate the effect each of the following transactions has on the accounting equation (i.e., assets, liabilities, and equity). Enter the number corresponding to your answer in the box provided. Answer choices may be used once, more than once, or not at all.

A) when cash is collected from customers B) when goods are sold or services are rendered to customers C) at the end of the accounting period D) only when the revenue can be matched by an equal dollar amount of expenses E) both (b) and (d) are correct

Explanation / Answer

1)revenue is recognized by the seller when it is earned irrespective of whether cash from the transaction has been received or not. As per this concept

E) both (b) and (d) are correct is the most apt answer

2)F)two of the above accounts are part of working capital namely supplies and accounts payable

3)F)debit accounts payable $400 and credit cash $400

4)E) 16.7%

As ROE is calculated on closing equity value hence calculated as 50000/300000

5)

As opening can be calculated as=57000+25000-39000

6)a)assets increase; liabilities no effect; equity increase

As cash is asset that is increased and revenue is increased thereby increasing profit and in turn equity

b)

c)assets no effect; liabilities increase; equity decrease

as income tax payable is liability and is recorded in the books decreasing profit and hence equity

d)assets no effect; liabilities no effect; equity no effect

As equipment is increased and cash decreased hence no effect

D) $43,000 credit

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.