Acceptance of Bills Payable will decrease a liability in the form of ______________________ and increase another liability in the form of ___________________________.
Answers
Answer:
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E)Decrease in asset, decrease in owner's capital- drawings (withdrawn by partners ) ie, decrease in capital ad decrease in cash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 (long term liability )
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Explanation:
Answer:
ICSEJEENEETPRICING
Effect
Example
i. Increase in asset and decrease in another asset
i. Sale of goods for cash.
Increase in cash and decrease in goods.
ii. Decrease in liability and increase in another liability
ii. Bills payable issued to creditors.
Increase in bill payable and decrease in liability
iii. Decrease in asset and decrease in owner’s equity
iii. Drawings by the proprietor Decrease in liability (capital) and decrease in asset (cash or bank)
iv. Increase in asset and increase in owner’s equity
iv. Introduction of capital by the proprietor increases asset (cash or bank) and also liability (capital)
.