Question

Give one example of each of the following transactions:
(i) Increase in an asset and a liability.
(ii) Decrease in an asset and a liability.
(iii) Increase in assets and capital.
(iv) Decrease in assets and capital.

Answer 1

Effect of Transaction	Example
(i) Increase in an asset and a liability	Goods purchased on credit
(ii) Decrease in an asset and a liability	Cash paid to creditors
(iii) Increase in assets and capital	Additional capital brought in by the proprietor
(iv) Decrease in assets and capital	Salary paid in Cash