Please explain the transaction and its impact on the Balance Sheet equation. Transaction 5: Our company performs services worth $25,000 and this customer will pay us on account, meaning they will make payment at a later date. Hint: On account means accounts receivable. We must ask ourselves what account is used when we perform services. The answer is the revenue account. As you learned last week, revenue accounts add to retained earnings, which is an equity account, and accounts receivable is an asset account. To increase an equity account, we must credit the account, and to increase an asset account, we must debit the account. The equation will remain in balance because we will have a $25,000 addition on the debit or left-hand side of the balance sheet equation and a $25,000 addition on the credit or right-hand side of the balance sheet equation.

Please explain the transaction and its impact on the Balance Sheet equation. Transaction 5: Our company performs services worth $25,000 and this customer will pay us on account, meaning they will make payment at a later date. Hint: On account means accounts receivable. We must ask ourselves what account is used when we perform services. The answer is the revenue account. As you learned last week, revenue accounts add to retained earnings, which is an equity account, and accounts receivable is an asset account. To increase an equity account, we must credit the account, and to increase an asset account, we must debit the account. The equation will remain in balance because we will have a $25,000 addition on the debit or left-hand side of the balance sheet equation and a $25,000 addition on the credit or right-hand side of the balance sheet equation.

Century 21 Accounting General Journal

11th Edition

ISBN:9781337680059

Author:Gilbertson

Publisher:Gilbertson

Chapter2: Analyzing Transactions Into Debit And Credit Parts

Section2.1: Using T Accounts

Problem 1OYO

See similar textbooks

Similar questions

Consider the following transactions associated with accounts receivable and the allowance for uncollectible accounts. Required: For each transaction, indicate whether it would increase, decrease, or have no effect by leaving the cell blank, on the account totals. (Hint: Make sure the accounting equation, Assets = Liabilities + Stockholders' Equity, remains in balance after each transaction.) Stockholders' Credit Sales Transaction Cycle Assets Liabilities Revenues Expenses Equity rovide services on account Increase ease Increase 2. Estimate uncollectible accounts Decrease Decrease Increase 3. Write off accounts as uncollectible 4. Collect on account previously written off
When fees are earned and the customer promises to pay later, which account is debited? (a) Cash (b) Accounts Receivable (c) Accounts Payable (d) Capital
What Would You Say? A fellow accounting student has difficulty understanding how the fundamental accounting equation stays in balance when a compound entry with one debit and two credits is recorded. Consider, for example, that a business bought equipment for 7,000, paid 3,000 in cash, and placed the remainder on account. This means that there are two credits and one debitone debit and one credit on the left side of the equation and the other credit on the right side of the equation. Explain to your fellow student how the equation stays in balance.
1. Please see the attached photo. 2. The chart of accounts is a listing of the accounts presently having balances in the general ledger. True or false? 3. Revenue is the amount of money your business brings in by selling it's products or services to clients.
required: please answer this question by choosing the right options.
Which statement concerning the average settlement period for accounts payable is correct? Select one: a.It is always best for the business to make creditors wait for their money for as long as possible. b.It is best to pay accounts payable as quickly as possible. c.A change in the accounts payable turnover period of 56 days to 65 days means that accounts payable are being paid faster. d.Accounts payable provide a free source of finance for a business.
1.The chart of accounts is a listing of the accounts presently having balances in the general ledger. True or false? 2.. Revenue is the amount of money your business brings in by selling it's products or services to clients. True or false?
What is the normal balance for the following accounts? (Highlight the answer) (For example: Cash Debit Credit) Accounts Receivable Debit Credit Accounts Payable Debit Credit Equipment Debit Credit Service Revenue Debit Credit Prepaid Insurance Debit Credit Expense Debit Credit For each of the transactions in items 2 through 5, indicate the two (or more) effects on the accounting equation of the business or company. (Highlight the answer) Receive payment in cash for outstanding account receivable Assets Increase Decrease No effect Liability Increase Decrease No effect Equity Increase Decrease No effect The company purchases land by paying half in cash and signing a note payable for the other half Assets Increase Decrease No effect…
Please see below. I need help with this asap please and thank you. The first picture is the information needed and the second has what the problem is asking for the answer to.
Kitty Inc. shares the following information with you and ask you to determine their ending receivables balance. What is the correctly computed balance? opening accounts receivable, $40 million Sales $160 million and Collections $145 million. Answer:
please click on image to see more clear
Why is it important to keep a schedule of accounts payable? O A. to keep track of how many vendors a company has O B. to keep track of what a company owes O C. to determine a company's income after expenses O D. to update all current account balances