Describe whether the transaction will increase, decrease, or will have no effect

Question

Describe whether the transaction will increase, decrease, or will have no effect on A, L, or S.E.

Transaction Assets = Liabilities + Stockh. Equity Example: Obtain a loan. Incr. = Incr. + No effect Buy equipment with cash. = + Prepay with cash for insurance. = + Pay employees' salaries with cash. = + Purchase office supplies on account. = + Pay accounts payable. = + Provide service to customers on account. = + Provide service to customers in cash. = + Pay cash for utilities for the current month. = + Pay cash dividends to stockholders. = +

Explanation / Answer

Transaction Assets = Liability + Stockh. Equity Buy equipment with cash. no effect = no effect + no effect Prepay with cash for insurance. no effect = no effect + no effect Pay employees' salaries with cash. decrease = no effect + decrease Purchase office supplies on account. increase = increase + no effect Pay accounts payable. decrease = decrease + no effect Provide service to customers on account increase = no effect + increase Provide service to customers in cash. increase = no effect + increase Pay cash for utilities for the current month. decrease = no effect + decrease Pay cash dividends to stockholders. decrease = no effect + decrease

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