Question

Give one example of each of the following transactions:
1. increase in an asset and a liability.
2. decrease in an asset and a liability.
3. increase in assets and capital.
4. decrease in assets and capital.​

Answer 1

Answer:

1. (i)Increase in an Asset–Land and Building Appreciated.

(ii)Increase in a Liability– Workmen Compensation Claim

2.(i)Decrease in an Asset– Plant and Machinery

(ii)Decrease in a Liability– Creditors Written

3.(i)[1.(i)]

(ii)Increase in Capital–Interest on Capital/Fresh Capital Introduced

4.(i)[2.(i)]

(ii)Decrease in Capital–Interest on Drawings/Capital Withdrawn