Question

Give an example for each of the following types of transaction.
(i) Increase in one asset, decrease in another asset.
(ii) Increase in asset, increase in liability.
(iii) Increase in asset, increase in owner's capital.
(iv) Decrease in asset, decrease in liability.
(v) Decrease in asset, decrease in owner's capital.
(vi) Decrease in liabilities, increase in owner's capital.
(vii) Increase in one liability, decrease in another liability.
(viii) Increase in liabilities, decrease in owner's capital.

Answer 1

(i) Purchase of furniture for cash - Increase in furniture and decrease in cash.
(ii) Purchase of furniture on credit - increase in furniture and increase in creditors.
(iii) Capital Introduced by proprietor- Increase in cash and increase in capital.
(iv) Payment to creditors - Decrease in cash and decrease in creditors.
(v) Cash withdrawn by proprietor- Decrease in cash and decrease in capital.
(vi) Conversion of partner's Loan into capital- increase in capital and decrease in loan.
(vii) Bills payable accepted - Increase in bills payable and decrease in creditors.
(viii) Outstanding expenses provided - INcrease in creditors for outsanding expenses and decrease in capital