Indicate whether each of the following statements about the types of transaction
ID: 2422407 • Letter: I
Question
Indicate whether each of the following statements about the types of transactions is true or false.
_______ a) An asset source transaction increases total assets and decreases claims to assets.
_______ b) The issuance of stock to owners for cash would be an example of an asset exchange transaction.
_______ c) Purchasing equipment for cash is an example of an asset exchange transaction.
_______ d) Paying a dividend to stockholders is an example of an asset use transaction.
_______ e) Making a payment on a bank loan is an example of an asset exchange transaction
Explanation / Answer
False, a) An asset source transaction increases total assets and decreases claims to assets - An assets source transaction increase the total assets and claim to assets through revenue , liability and owner's equity.
False , b) The issuance of stock to owners for cash would be an example of an asset exchange transaction.- In assets exchange transaction , total assets is increased by one coming assets and total assets is decreased by going another assets.
True, c) Purchasing equipment for cash is an example of an asset exchange transaction, - In assets exchange trasaction, total assets remains entact , cash goes out and equipment comes in
True d) Paying a dividend to stockholders is an example of an asset use transaction. - Under assets use transaction, transaction decrease the assets as well as decreases the liability(claims to assets)
False e) Making a payment on a bank loan is an example of an asset exchange transaction- In this liability is decreased , and assets is also decreased by going cash.