Question

Part three—analyzing how transactions change an accounting equation directions: for each of the following transactions, select the two accounts in the accounting equation that are changed. decide if each account is increased or decreased. place a " " in the column if the account is increased. place a "−" in the column if the account is decreased. transactions 1–2. received cash from owner nicole mcgraw as an investment. 3–4. paid cash for supplies. 5–6. paid cash for insurance. 7–8. bought supplies on account from hyde park office supplies. 9–10. paid cash on account to hyde park office supplies.

Answer 1

The accounting equation is altered by transactions involving cash inflows and outflows, as well as adjustments to assets, liabilities, and owner's equity.

Step-by-step explanation:

When analyzing how transactions change an accounting equation, it is important to identify which accounts are affected and whether they are increased or decreased. Here are the analyses for the given transactions:

1. Received cash from owner Nicole McGraw as an investment: Assets (Cash) would increase and Owner's Equity would also increase.
2. Paid cash for supplies: Assets (Cash) would decrease and Assets (Supplies) would increase.
3. Paid cash for insurance: Assets (Cash) would decrease and Expenses (Insurance) would increase.
4. Bought supplies on account from Hyde Park Office Supplies: Assets (Supplies) would increase and Liabilities (Accounts Payable) would increase.
5. Paid cash on account to Hyde Park Office Supplies: Assets (Cash) would decrease and Liabilities (Accounts Payable) would decrease.

A T-account helps visualize these changes, with two columns representing debits and credits affecting the balance sheet, while understanding transaction costs can be crucial for a business. Moreover, terms like time deposit and unit of account are useful for grasping the concepts of how money is managed within an economy and financial institutions.