Question

Receives and pays for a $15,000 truck and $5,000 of equipment.

1.Does a transaction exist?
2.Examine it for accounts affected.
3.Classify each account affected.
4.Identify direction and amount.
5.Ensure the equation still balances.

Answer 1

Yes, a transaction exists where a $15,000 truck and $5,000 of equipment are received and paid for. The accounts affected are the Truck account, the Equipment account, and the Cash account. The equation still balances because the total amount of assets equals the total amount spent.

Step-by-step explanation:

1. Yes, a transaction exists.

2. The accounts affected are the Truck account, the Equipment account, and the Cash account.

3. The Truck account and the Equipment account are classified as long-term assets, while the Cash account is classified as a current asset.

4. The direction of the transaction is an outflow of Cash, and the amounts are $15,000 for the Truck and $5,000 for the Equipment.

5. The equation still balances because the total amount of assets (Truck + Equipment + Cash) equals the total amount spent ($15,000 + $5,000 = $20,000).