Question
Asked Nov 30, 2019
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Describe how the following business transactions affect the three elements of the accounting equation:
a. Invested cash in business.
b. Paid for utilities used in the business.
c. Purchased supplies for cash.
d. Purchased supplies on account.
e. Received cash for services performed.

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Expert Answer

Step 1

Accounting equation: Accounting equation consists of assets, liabilities and capital. Total assets are equal to total liabilities. According to this equation, when assets increase, corresponding increase will happen on either liabilities or owners’ equity.

Step 2

The following formula used for accou...

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Assets Liabilities Stockholders' equity

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Financial Accounting

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