Question

LO4. How do you analyze a transaction? a) In your own words, what is transaction? b) Which accounts would be affected by each of the following transactions and identify if the account would increase or decrease. i) The business receives cash from John Jones in exchange for capital Example: Cash (Increase) and Jones, Capital (Increase) ii) The company paid cash for land iii) Performed services for clients on account iv) Purchased Office Supplies on account

Answer 1

A. In accounting, transaction is a business event having a pecuniary impact on the financial statements of a business and the same is recorded in the accounting records of the business.

Eg:Cash Sale to a customer, credit sale to a customer etc.

B.ii) Cash(decrease) and land (increase)

iii) Accounts receivable (increase) and Service revenue (increase)

iv) Office supplies (increase) and Accounts payable (increase)

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