Respuesta :
Answer:
a. . Invested cash in business in exchange for common stock- Increase in asset and equity
b. Paid for business expenses - Reduction in asset and equity
c. Paid dividends - Reduction in asset and equity
d. Purchased supplies on account - Increase in assets and liability
e. Received cash for services performed - Increase in asset and equity
Explanation:
The accounting equation shows the relationship between the elements of a balance sheet which are assets liabilities and equity. This may be expressed mathematically as
Assets = Liabilities + Equity
While assets include fixed assets, cash, inventories, account receivables etc, liabilities include accounts payable, loans payable, accrued expenses etc.
Equity which represents the amount owed to the owners of the business includes retained earnings (which is the accumulation of the net income/loss over the years less dividends paid) and common shares.
Business is known to have its ups and down times. The effect of each of the transactions on the three elements are:
- Invested cash in business leads to an Increase assets and increase stockholders equity.
- Paid for utilities used in the business. leads to a decrease assets and decrease stockholders equity.
- Purchased supplies for cash leads to Increase assets and decrease assets
- Purchased supplies on account leads to Increase assets and increase liabilities
- Received cash for services performed leads to Increase assets and increase stockholders equity.
An accounting transaction is simply known to be a type of business activity. This often leads to an amount of change that can be measured using an accounting equation.
Conclusively, When there is a business transaction going on, there tend to be an increase or a decrease.
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