Asked by Patti Raether on May 17, 2024
Verified
Indicate how the following transactions affect the accounting equation.
(a) The purchase of supplies on account
(b) The purchase of supplies for cash
(c) A withdrawal by the owner to pay personal expenses
(d) Revenues received in cash
(e) Sale made on account
Accounting Equation
The foundational equation in accounting, representing the relationship between assets, liabilities, and equity (Assets = Liabilities + Equity).
Supplies
Consumable items or materials used in the daily operations of a business or for the completion of a task.
Withdrawal
The act of removing funds from an account or the act of taking out resources or assets from business use by the owners.
- Learn about the consequences of various transactions on the accounting equation.
- Evaluate how purchasing and liquidating assets influence a firm's financial health.
Verified Answer
KF
Kiana FinstadMay 18, 2024
Final Answer :
(a) Assets increase; liabilities increase
(b) No effect
(c) Assets decrease; owner's equity decreases
(d) Assets increase; owner's equity increases
(e) Assets increase; owner's equity increases
(b) No effect
(c) Assets decrease; owner's equity decreases
(d) Assets increase; owner's equity increases
(e) Assets increase; owner's equity increases
Learning Objectives
- Learn about the consequences of various transactions on the accounting equation.
- Evaluate how purchasing and liquidating assets influence a firm's financial health.