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Effects of transactions on Accounting equation Describe how the following business transactions affect the three elements of the account- ins equation. a. Received cash for services performed. b. Paid for utilities used in the business. c. Borrowed cash at local hank. d. Issued common stock for cash. e. Purchased land for cash.

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Survey of Accounting (Accounting I)

8th Edition
Carl Warren
Publisher: Cengage Learning
ISBN: 9781305961883

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BuyFindarrow_forward

Survey of Accounting (Accounting I)

8th Edition
Carl Warren
Publisher: Cengage Learning
ISBN: 9781305961883
Chapter 2, Problem 2.7E
Textbook Problem
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Effects of transactions on Accounting equation
Describe how the following business transactions affect the three elements of the account- ins equation.
a. Received cash for services performed.
b. Paid for utilities used in the business.
c. Borrowed cash at local hank.
d. Issued common stock for cash.
e. Purchased land for cash.

To determine

Concept Introduction:

Accounting equation:

Accounting equation represents the mathematical relationship between assets, liabilities and equity. According to this equation, assets are equal to the sum of liabilities and equity. The formal for basic accounting equation is as follows:

  Assets = Liabilities + Equity

To Indicate:

The effect of each transaction on accounting equation

Explanation of Solution

The effect of each transaction on accounting equation is explained as follows:

    #Transaction Assets Liabilities Stockholder's Equity
    a.Cash received for services performed Increase No Effect Increase
    b.Cash paid for utilities expense Decrease No Effect Decrease
    c...

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Survey of Accounting (Accounting I)
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