Let me know the situation when is a transaction affects one
side of accounting equation
Answer / freethinker
Only one side of the accounting equation will be affected when one asset is used to acquire another asset or to replace another asset, when one liability replaces another liability, when stock is issued to replace a liability, when a cash dividend or stock dividend is declared. There are many other situations as well.
Here are some specific examples when only the left side of the accounting equation is affected. 1) A customer cannot pay an amount it owes and provides the company with a notes receivable. The company's asset Accounts Receivable will decrease and its asset Notes Receivable will increase. 2) A company prepays its insurance. As a result its asset Cash decreases and its asset Prepaid Insurance increases. 3) A company buys equipment for cash. The asset Cash decreases and the asset Equipment increases.
Here are some transactions that will affect only the right side of the accounting equation. 1) A company refinances its short-term debt with long-term debt. Short-term liabilities will decrease and long-term liabilities will increase. 2) A corporation issues common stock to replace its convertible bonds.
Is This Answer Correct ? | 1 Yes | 0 No |
Contra entry with example?
40 Answers Industrial Power Supplies, PVS Advertising,
Bank Overdraf is an Asset or a liability for a Bank?
EXPAND______________RITES
What is SLR?
what are time sheets?how they are maintained?
who to culculated depriciation of fixed asstes & buildings
Please tell me about service tax, tds, vat & ITR return with A to Z completely detail.
0 Answers Dixit Infotech, KSS,
how to prepare Profit and los accounts ?
8 Answers College School Exams Tests, MLA, Study Overseas,
How can we post Salary, PF etc., can anybody tell me the entry
EXPAND______________RTA
Expand F A Qs
What is Money Measurement concept