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Match the Combination of Changes in the Accounting Equation Described

Question 105

Matching

Match the combination of changes in the accounting equation described below with the events listed below.

Premises:
Services promised in 4 above are performed
Owner withdraws cash for personal use
Customer who owes firm money goes bankrupt
Receive cash in advance for services that will be performed later
Purchased land by giving stock to the seller
Purchased inventory with cash
Borrowed money from bank by signing a note payable
Company signs a new 5-year note to replace 1-year note that came due
Lose major customer to competitor
Paid an accounts payable
Responses:
Assets decrease; Owner's equity decrease
Assets increase; Owner's equity increase
Liabilities increase; Owners' equity decreases
Owners' equity increases; Owners' equity decreases
Liabilities decrease; Owners' equity increases
Assets decrease; Liabilities decrease
Assets increase; Liabilities increase
Liabilities increase; Liabilities decrease
Not recorded in accounting system
Assets increase; Assets decrease

Correct Answer:

Services promised in 4 above are performed
Owner withdraws cash for personal use
Customer who owes firm money goes bankrupt
Receive cash in advance for services that will be performed later
Purchased land by giving stock to the seller
Purchased inventory with cash
Borrowed money from bank by signing a note payable
Company signs a new 5-year note to replace 1-year note that came due
Lose major customer to competitor
Paid an accounts payable
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