Impacts on the accounting equation

Question 1

Impact of payment to accounting equation (Accounts payable) $380 ex GST

Answer 1

A: Decrease in bank by $418
L: Decrease in accounts payable by $418

Question 2

Impact of a credit purchase on the accounting equation

$380 + 38GST

Answer 2

A: Increase by $380 for inventory
L: Decrease $38 GST payable
Increase $418 Accounts payable

Question 3

Impact of a cash purchase of inventory on the accounting equation (2000 + 200 GST)\

Answer 3

A: Bank increase $2200
Inventory incerase $2000
L: GST payable decrease $200
OE: no effect

Question 4

Impact of a credit purchase of inventory on the accounting equation ($2000 + $200GST)

Answer 4

A: Inventory increase $2000
L: GST payable decease $200
Accounts payable increase $2200
OE: No effect

Question 5

Impact of cash sales of inventory on the accounting equation (sold $700 + $70GST from a cost price of $500)

Answer 5

A: Bank increase $770
     Inventory decrease $500
L: GST payable increase $70
OE: Sales increase $700
       Cost of sales increase $500 -> OE decrease $500

• There will always be 5 items impacted

Question 6

Impact of a credit sale of inventory on the accounting equation (sale $700 + $70GST with a cost price of $500)

Answer 6

A: Accounts receivable increase $770
    Inventory decrease $500
L: GST payable increase $70
OE: Sales increase $700
      Cost of sale increase $500 -> OE decrease $500

*will always have an effect on 5 items

Question 7

Impact of a purchase return on the accounting equation (Inventory of $11 + $1.1GST)

Answer 7

A: Inventory decrease $11
L: Accounts payable decrease $ 12.1
GST payable increase $1.1
OE: No effect

Question 8

Impact of a sales return on the accounting equation (sale of $175 + $17.50GST with a purchase price of %55)

Answer 8

A: Inventory increase $55
    Accounts receivable decrease $192.50
L: GST payable decrease $17.50
OE: Sales return increase $175 (*This is a negative revenue)
       Cost of sales decrease $55

Question 9

Impact of drawing of inventory on the accounting equation (Value of $20)

Answer 9

A: Inventory decrease $20
L: No effect
OE: Drawing increase $20 -> OE decrease $20

Question 10

Impact of advertising using inventory on the accounting equation (Value of $20)

Answer 10

A: Inventory decrease $20
L: No effect
OE: Advertising increase $ 20 -> OE Decrease $20