Economic Events affect on the Accounting Equation

Question 1

Investment of Cash by Stockholders

Answer 1

+Cash +Common Stock

Question 2

Note Issued in Exchange for Cash

Answer 2

+assets(cash) +liabilities(notes payable)

Question 3

Purchase of Equipment for Cash

Answer 3

Equal +&- in assets

Question 4

Receipt of Cash Advance from Customer

Answer 4

+Assets(cash) +Liabilities(unearned service revenue)

Question 5

Services Performed for Cash

Answer 5

+assets(cash) +SE(revenue)

Question 6

Payment of Rent

Answer 6

-assets(cash) +SE(RE,expenses)

Question 7

Purchase of Insurance Policy for Cash

Answer 7

+assets(prepaid insurance) -assets(cash)

Question 8

Purchase of Supplies on Account

Answer 8

+assets(supplies)

Question 9

Hiring New Employees

Answer 9

On the date the employees are hired, there is no effect on the accounting equation

Question 10

Payment of Dividends

Answer 10

-assets(cash) -SE(RE,dividends)

Question 11

Payment of Cash for Employee Salaries

Answer 11

-assets(cash) -SE(RE,expenses)