Accounting: Tools for Business Decision Making, 5th Edition

Published by Wiley
ISBN 10: 1118128168
ISBN 13: 978-1-11812-816-9

Chapter 3 - The Accounting Information System - Brief Exercises - Page 137: BE3-1

Answer

a) liability(+) b) assets(+) c) assets(-)

Work Step by Step

a) Because the goods purchased on credit the creditor account should be credited it means liabilities will increase because goods purchased on credit. b) Received cash means cash account is debited it means assets will increase because cash is assets. c) Paid cash for expenses means cash account is credited it means assets will decrease because cash is assets. \[ \begin{array}{|c|c|c|c|} \hline \textbf{Event} & \textbf{Assets} & \textbf{Liabilities} &\textbf{Stockholders'}\\ \textbf{} & \textbf{} & \textbf{} &\textbf{Equity} \\ \hline \textbf{(a)} & + & + & - \\ \hline \textbf{(b)} & + & NE & + \\ \hline \textbf{(c)} & - & NE & - \\ \hline \end{array} \]
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