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For Each Transaction Identify Its Effect on the Accounting Equation

Question 129

Matching

For each transaction identify its effect on the accounting equation You may use each choice more than once or not at all.

Premises:

Responses:

Purchased computer equipment for cash

+ A and + L

Received cash in exchange for the issuance of a note payable

+ A and + SE (Contributed Capital)

Purchased building and land in exchange for a mortgage note payable

+ A and + SE (Retained Earnings)

Received cash in exchange for the issuance of common stock

- A and - L

Purchased computer supplies on account

- A and - SE (Contributed Capital)

Provided computer services to customers for cash

- A and - SE (Retained Earnings)

Paid an account payable

+ A and - A

Provided computer services to customers on account

Not communicated by the formal accounting system

Used computer supplies in the regular operations of the business (acquired during a previous accounting period)

Recognize part of the cost of the service potential of the company’s computer

Secured a large contract with Allegheny Company to provide computer services during the forthcoming year

Declared and paid dividends to the owners of common stock

Premises:

Purchased computer equipment for cash

Received cash in exchange for the issuance of a note payable

Purchased building and land in exchange for a mortgage note payable

Received cash in exchange for the issuance of common stock

Purchased computer supplies on account

Provided computer services to customers for cash

Paid an account payable

Provided computer services to customers on account

Used computer supplies in the regular operations of the business (acquired during a previous accounting period)

Recognize part of the cost of the service potential of the company’s computer

Secured a large contract with Allegheny Company to provide computer services during the forthcoming year

Declared and paid dividends to the owners of common stock

Responses:

+ A and + L

+ A and + SE (Contributed Capital)

+ A and + SE (Retained Earnings)

- A and - L

- A and - SE (Contributed Capital)

- A and - SE (Retained Earnings)

+ A and - A

Not communicated by the formal accounting system

Correct Answer:

Premises:

Responses:

Purchased computer equipment for cash

Received cash in exchange for the issuance of a note payable

Purchased building and land in exchange for a mortgage note payable

Received cash in exchange for the issuance of common stock

Purchased computer supplies on account

Provided computer services to customers for cash

Paid an account payable

Provided computer services to customers on account

Used computer supplies in the regular operations of the business (acquired during a previous accounting period)

Recognize part of the cost of the service potential of the company’s computer

Secured a large contract with Allegheny Company to provide computer services during the forthcoming year

Declared and paid dividends to the owners of common stock