Question

1, Describe a transactions that would : A)Increase in one asset, decrease in another asset. B)Increase in asset, increase in liability C)Increase in asset, increase in owner's capital D)Decrease in asset, decrease in liability E)Decrease in asset, decrease in owner's capital F)Increase in one liability, decrease in another liability G)Increase in liability, decreas
e in owner's capital H)Decrease in liability, increase in owner's capital.

Answer 1

A)Increase in one asset, decrease in another asset.-    purchase of machinery in cash . ie. increase in asset and decrease in cash 

         

B)Increase in asset, increase in liability - purchase goods on credit ie. increase in stock and increase in creditors

C)Increase in asset, increase in owner's capital -issue of shares ie. increase in share capital and increase in cash .

D)Decrease in asset, decrease in liability -Payment to creditors ie, decrease in cash and decrease in creditors 

E)Decrease in asset, decrease in owner's capital-  drawings (withdrawn by partners ) ie, decrease in capital ad decrease in cash  

F)Increase in one liability, decrease in another liability- Bills Payable issued to Creditors.ie., This will reduce one liability (Creditors) on the one hand and increase another liability (Bills Payable) on the other hand.

G)Increase in liability, decrease in owner's capital -  Conversion of share capital into debentures.ie, increase in debentures and decrease in share capital .

H)Decrease in liability, increase in owner's capital.-Conversion of debentures into shares.,ie. increase in share capital and decrease in debenture