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Examples: Receive payment in cash for outstanding account receivable Assets Liability Equity Increase Increase Increase Liability Equity Decrease Decrease Decrease 2. The company purchases land by paying half in cash and signing a note payable for the other half Assets Increase Increase Increase No effect No effect No effect Decrease Decrease Decrease No effect No effect No effect 3. Cash received in advance from client for services is recorded in unearned revenue. Assets Increase Decrease No effect Liability Increase Decrease No effect Equity Increase Decrease No effect

Examples: Receive payment in cash for outstanding account receivable Assets Liability Equity Increase Increase Increase Liability Equity Decrease Decrease Decrease 2. The company purchases land by paying half in cash and signing a note payable for the other half Assets Increase Increase Increase No effect No effect No effect Decrease Decrease Decrease No effect No effect No effect 3. Cash received in advance from client for services is recorded in unearned revenue. Assets Increase Decrease No effect Liability Increase Decrease No effect Equity Increase Decrease No effect

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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For each of these transactions highlight the effects on the accounting equation of the business
Highlight the answer) (24 pts) Examples: Receive payment in cash for outstanding account receivable Assets Liability Equity Increase Increase Increase Decrease Decrease Decrease Increase Increase Increase 2. The company purchases land by paying half in cash and signing a note payable for the other half Assets Liability Equity Decrease Decrease Decrease No effect No effect No effect Decrease Decrease Decrease No effect No effect No effect 3. Cash received in advance from client for services is recorded in unearned revenue. Assets Increase No effect Liability Increase No effect Equity Increase No effect
Transcribed Image Text:Highlight the answer) (24 pts) Examples: Receive payment in cash for outstanding account receivable Assets Liability Equity Increase Increase Increase Decrease Decrease Decrease Increase Increase Increase 2. The company purchases land by paying half in cash and signing a note payable for the other half Assets Liability Equity Decrease Decrease Decrease No effect No effect No effect Decrease Decrease Decrease No effect No effect No effect 3. Cash received in advance from client for services is recorded in unearned revenue. Assets Increase No effect Liability Increase No effect Equity Increase No effect
4. Pay next quarter rent in cash in advance Assets Increase Decrease Liability Increase Decrease Equity Increase Decrease 5. Accrued expenses Assets Liability Equity Increase Increase Increase Decrease Decrease Decrease No effect No effect No effect No effect No effect No effect
Transcribed Image Text:4. Pay next quarter rent in cash in advance Assets Increase Decrease Liability Increase Decrease Equity Increase Decrease 5. Accrued expenses Assets Liability Equity Increase Increase Increase Decrease Decrease Decrease No effect No effect No effect No effect No effect No effect
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