Question

Indicate what impact the following transactions would have on the accounting equation, Assets = Liabilities + Equity. Transaction impact table Impact 1 Impact 2 Paid monthly note payment to bank Sold inventory on account Bought supplies, to be paid for next month Received cash from sales this month Paid for inventory purchased on account last month

Answer 1

The impact of the transactions on the accounting equation, Assets = Liabilities + Equity, is as follows:

Paid monthly note payment to bank:

Impact 1: Assets (Cash) decreases

Impact 2: Liabilities (Bank Loan) decreases

Sold inventory on account:

Impact 1: Assets (Accounts Receivable) increases

Impact 2: Equity (Revenue) increases

Bought supplies, to be paid for next month:

Impact 1: Assets (Supplies) increases

Impact 2: Liabilities (Accounts Payable) increases

Received cash from sales this month:

Impact 1: Assets (Cash) increases

Impact 2: Equity (Revenue) increases

Paid for inventory purchased on account last month:

Impact 1: Assets (Cash) decreases

Impact 2: Liabilities (Accounts Payable) decreases

It is important to note that for each transaction, one side of the equation must increase and the other side must decrease in order to keep the equation in balance.

Step-by-step explanation: