Question 2 (4 points) For each of the following transactions, indicate whether it will increase "+",...

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business accounting

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Answer 1

Answer #1

Repayment of mortgage: -

This decreases cash flow, since cash is an asset and it is going out from the business.

Purchase of equipment: -

This also decreases cash flow, since the asset is purchased in exchange of cash payment.

Issue of share: +

This increases cash flow and it comes under financing activities. Since the shares are issued, there is an incoming of cash.

Collection: +

This increases cash flow under operating activities. This indicates the collection of cash from debtors (accounts receivables). Such act increases the cash balance of the business.

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Answer 2

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