Answer to Question #207979 in Accounting for zohaib

Question

Give examples of transactions that would have the following effects on the items in a firm’s

financial statements:

a. Increase cash; decrease some other asset.

b. Decrease cash; increase some other asset.

c. Increase an asset; increase a liability.

d. Decrease retained earnings; decrease an asset.

e. Increase an asset other than cash; increase retained earnings.

f. Decrease an asset; decrease a liability

Answer 1

a. When a firm's debtor pays their credit invoices (It increases cash; decreases account receivables)

b. When a firm buys a piece of land (It decreases cash; increases land account)

c. When a firm purchases computer equipment on credit (It increases equipment; increases accounts payable)

d. When a firm pays out dividends (It decreases cash; decreases retained earnings)

e. When a firm increases customer prices on its credit services (It increases accounts receivable; increases retained earnings by increasing sales)

f. When a firm pays its creditors (It decreases cash; decreases accounts payable)