Which of the following is incorrect?

Transaction Effect on Assets
Cash paid to creditors Increase

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Transaction Effect on Assets
Cash paid to creditors Decrease

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Transaction Effect on Assets
Cheque issue to creditors Decrease

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Transaction Effect on Assets
Goods bought on credit Increase

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Solution

The correct option is A
Transaction Effect on Assets
Cash paid to creditors Increase

Cash paid to creditors will decrease the cash balance of the company, hence option A is incorrect. All the others are correct.

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Similar questions

Rohit has the following transactions:

		Rs
(a)	Commenced business with cash	1,50,000
(b)	Purchased machinery on credit	40,000
(c)	Purchased goods for cash	20,000
(d)	Purchased car for personal use	80,000
(e)	Paid to creditors in full settlement	38,000
(f)	Sold goods for cash costing Rs 5,000	4,500
(g)	Paid rent	1,000
(h)	Commission received in advance	2,000

Prepare the Accounting Equation to show the effect of the above transactions on the assets, liabilities and capital.

Show the effect of the following transactions on Assets, Liabilities and Capital through accounting equation:

		Rs
(a)	Started business with cash	1,20,000
(b)	Rent received	10,000
(c)	Invested in shares	50,000
(d)	Received dividend	5,000
(e)	Purchase goods on credit from Ragani	35,000
(f)	Paid cash for house hold Expenses	7,000
(g)	Sold goods for cash (costing Rs 10,000)	14,000
(h) (i)	Cash paid to Ragani Deposited into bank	35,000 20,000

Q. Assuming That the Debt to Equity Ratio is 2 : 1, state giving reasons, which of the following transactions would (i) increase; (ii) Decrease; (iii) Not alter Debt to Equity Ratio:

(i) Issue of new shares for cash.
(ii) Conversion of debentures into equity shares
(iii) Sale of a fixed asset at profit.
(iv) Purchase of a fixed asset on long-term deferred payment basis.
(v) Payment to creditors.

Q. If a transaction has the effect of decreasing an asset, is the decrease recorded as a debit or as a credit? If the transaction has the effect of decreasing a liability, is the decrease recorded as debit or as credit?

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.

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Which of the following is incorrect?

The correct option is A Transaction Effect on Assets Cash paid to creditors Increase Cash paid to creditors will decrease the cash balance of the company, hence option A is incorrect. All the others are correct.

The correct option is A
Transaction Effect on Assets
Cash paid to creditors Increase

Cash paid to creditors will decrease the cash balance of the company, hence option A is incorrect. All the others are correct.