Chapter 1, Problem 5E

Exercise 1-5 Effect of events on the accounting equation

Olive Enterprises experienced the following events during 2018:

1. Acquired cash from the issue of common stock.

2. Paid cash to reduce the principal on a bank note.

3. Sold land for cash at an amount equal to its cost.

4. Provided services to clients for cash.

5. Paid utilities expenses with cash.

6. Paid a cash dividend to the stockholders.

Required

Explain how each of the events would affect the accounting equation by writing the letter I for increase, the letter D for decrease, and NA for does not affect under each of the components of the accounting equation. The first event is shown as an example.