Question

Indicate whether the terms of the accounting equation will increase, decrease or stay the

same for each transaction by placing a "+" or "-" in the appropriate space. If an item is not
changed by the transaction, leave the space blank.
Transaction Assets = Liabilities + Net Worth
Deposited salary earned
Purchased a new TV on
credit.
Received a cash gift.
Purchased fuel for car on
credit.
Made a loan payment
including interest.
Received cash from a
student loan.
Received a paycheque.

Answer 1

The accounting equation is impacted by various transactions, such as depositing a salary, buying items on credit, receiving gifts or loans, and making payments. These transactions will cause increases or decreases in assets, liabilities, and net worth accordingly.

Step-by-step explanation:

The student is tasked with understanding how various financial transactions impact the accounting equation: Assets = Liabilities + Net Worth. The following explanations offer guidance on how to indicate whether the terms of the accounting equation will increase, decrease or stay the same for each transaction

• Deposited salary earned: Assets increase (+), Net Worth increases (+), Liabilities (Blank - No change).
• Purchased a new TV on credit: Assets increase (+), Liabilities increase (+), Net Worth (Blank - No change).
• Received a cash gift: Assets increase (+), Net Worth increases (+), Liabilities (Blank - No change).
• Purchased fuel for car on credit: Assets increase (+), Liabilities increase (+), Net Worth (Blank - No change).
• Made a loan payment including interest: Assets decrease (-), Liabilities decrease (-), Net Worth (Blank - No change).
• Received cash from a student loan: Assets increase (+), Liabilities increase (+), Net Worth (Blank - No change).
• Received a paycheque: Assets increase (+), Net Worth increases (+), Liabilities (Blank - No change).