2: Recording business transactions

Question 1

indicate the name of the account the transaction affects and if the account is (i) an Asset, Liability, Income, Owners Equity or Expense; and (ii) indicate if the transaction results in an increase or decrease in the account.

Purchased a car for cash

Answer 1

a) (i) Car (asset) (ii) increase

b) (i) Cash (asset) (ii) decrease

Question 2

indicate the name of the account the transaction affects and if the account is (i) an Asset, Liability, Income, Owners Equity or Expense; and (ii) indicate if the transaction results in an increase or decrease in the account.

Cash borrowed from the bank

Answer 2

a) (i) Cash (asset) (ii) increase

b) (i) AP (liability) (ii) increase

Question 3

indicate the name of the account the transaction affects and if the account is (i) an Asset, Liability, Income, Owners Equity or Expense; and (ii) indicate if the transaction results in an increase or decrease in the account.

Sold goods for cash

Answer 3

a) (i) Goods (asset) (ii) decrease

b) (i) Cash (asset) (ii) increase

Question 4

indicate the name of the account the transaction affects and if the account is (i) an Asset, Liability, Income, Owners Equity or Expense; and (ii) indicate if the transaction results in an increase or decrease in the account.

Purchased supplies on account (Credit)

Answer 4

a) (i) Supplies (asset) (ii) increase

b) (i) AR (asset) (ii) decrease

Question 5

indicate the name of the account the transaction affects and if the account is (i) an Asset, Liability, Income, Owners Equity or Expense; and (ii) indicate if the transaction results in an increase or decrease in the account.

Salaries paid

Answer 5

a) (i) RE (owners equity) (ii) decrease

b) (i) AR (asset) (ii) decrease