Question

Financial Accounting: 2.1.5 Journal Entries and the Equation Suppose on January 1, 2014 Cardullo's purchases a new cash register for the shop and pays $800. ACCOUNTS CASH INVENTORY REVENUE ACCOUNTS RECEIVABLE PROPERTY, PLANT, & EQUIPMENT ASSETS = LIABILITIES + OWNERS' EQUITY $0 $0 = Attempts left: 2 SAVE SUBMIT Question 1 of 2

Answer 1

Accounting equation states that all assets shall be equal to the sum of liabilities and equity. Further, as per double entry system of book-keeping, each transaction shall have at least two accounts, meaning for each transaction, there will be impact on at least two ledger accounts.

The cash register here is assumed to be property, plant and equipment

Date	Particulars	Debit ($)	Credit ($)
Jan 1	Property, Plant and equipment	800
	Cash		800
	(To record purchase of cash register)

Analyzing above, the both accounts are assets. The long term asset is increased by $ 800 while the current asset i.e. cash declines by $ 800.

Assets	=	Liabilities	+	Capital
property, plant and equipment                   800
Cash                                                                (800)
NIL		NIL		NIL

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