Transaction on the current year accounting equation

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Reference no: EM131221071

1. Aashish Company had a transaction that caused a $40,000 decrease in both assets and liabilities. This transaction could have been a(n):

A. Purchase of office equipment for $54,000, paying $14,000 cash and issuing a note payable for the balance

B. Investment of $40,000 cash in the business by the stockholders

C. Purchase of office equipment for $40,000 cash

D. Repayment of a $40,000 bank loan

2. A company received a $24,000 payment for services to be performed over the next few months. What would the effect of this transaction on the current year’s accounting equation?

A. No effect on Assets; $24,000 decrease in Liabilities; $24,000 increase in Stockholders’ Equity

B. $24,000 increase in Assets; $24,000 increase in Liabilities; No effect on Stockholders’ Equity

C. $24,000 increase in Assets; No effect on Liabilities; $24,000 increase in Stockholders’ Equity

D. No effect on Assets; $24,000 increase in Liabilities; $24,000 decrease in Stockholders’ Equity

Reference no: EM131221071

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