Only one of the following statements correctly describes the effect of a transaction on the financial statements. Which one? A. The purchase of a motor van for £10,000 cash will increase the assets (motor van) by £10,000 and decrease equity by £10,000 B. A debtor who pays an amount owed £1,000 will result in an increase in sales by £1,000 and an increase in cash by £1,000 C. Goods purchased on credit £2,000 will increase inventories by £2,000 and increase trade payables by £2,000 D. The payment of a trade payable by £3,000 will decrease the claims (payables) by £3,000 and decrease equity by £3,000

Only one of the following statements correctly describes the effect of a transaction on the financial statements. Which one? A. The purchase of a motor van for £10,000 cash will increase the assets (motor van) by £10,000 and decrease equity by £10,000 B. A debtor who pays an amount owed £1,000 will result in an increase in sales by £1,000 and an increase in cash by £1,000 C. Goods purchased on credit £2,000 will increase inventories by £2,000 and increase trade payables by £2,000 D. The payment of a trade payable by £3,000 will decrease the claims (payables) by £3,000 and decrease equity by £3,000

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Description: Only one of the following statements correctly describes the effect of a transaction on the financial statements. Which one? A.The purchase of a motor van for£10,000cash will increase the assets (motor van) by£10,000and decrease equity by£10,

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter2: Introduction To Financial Statements

Section: Chapter Questions

Problem 5MC: Assume a company has a $350 credit (not cash) sale. How would the transaction appear if the business...

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Concept explainers

Financial Transaction Analysis

The transaction analysis is done with the help of the accounting equation. The basic accounting equation is alternatively known as the balance sheet equation is based on the double-entry system which says that for each transaction happening in a business, at least two accounts should be affected I.e. both the debit side and the credit side should be equal. The Accounting Equation is

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Question

Only one of the following statements correctly describes the effect of a transaction on the financial statements. Which one?

The purchase of a motor van for

£10,000

cash will increase the assets (motor van) by

£10,000

and decrease equity by

£10,000

A debtor who pays an amount owed

£1,000

will result in an increase in sales by

£1,000

and an increase in cash by

£1,000

Goods purchased on credit

£2,000

will increase inventories by

£2,000

and increase trade payables by

£2,000

The payment of a trade payable by

£3,000

will decrease the claims (payables) by

£3,000

and decrease equity by

£3,000

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