Land originally purchased for $28,635 is sold for $78,775 in cash. What is the effect of the sale on the accounting equation?Oa. assets increase by $50,140; owner's equity increases by $50,140Ob. assets increase by $78,775; liabilities decrease by $28,635; owner's equity increases $50,140Oc. assets increase by $19,120; no change in liabilities; owner's equity increases by $78,775Od. assets increase by $78,775; owner's equity increases by $78,775

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Description: Land originally purchased for $28,635 is sold for $78,775 in cash. What is the effect of the sale on the accounting equation?Oa. assets increase by $50,140; owner's equity increases by $50,140Ob. assets increase by $78,775; liabilities decrease by $

Answered: Land originally purchased for $28,635…

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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Land originally purchased for $28,635 is sold for $78,775 in cash. What is the effect of the sale on the accounting equation?
Oa. assets increase by $50,140; owner's equity increases by $50,140
Ob. assets increase by $78,775; liabilities decrease by $28,635; owner's equity increases $50,140
Oc. assets increase by $19,120; no change in liabilities; owner's equity increases by $78,775
Od. assets increase by $78,775; owner's equity increases by $78,775

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Step 1

Accounting Transaction:

An economic event, which causes impact (increases or decreases the value of the assets, liabilities or stockholders’ equity) in the accounting equation, is referred to as accounting transaction.

Accounting equation:

Accounting equation is an accounting tool expressed in the form of equation, by creating a relation between resources or assets of a business and claims on the resources by the creditors, and the owners.

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