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Lim corporation purchases $10,000 of equipment for cash. the effect of this transaction is:_________


This transaction increases the company's equipment and decreases its cash balance by $10,000.

  • Identify the accounts impacted by the transaction. A: Cash and Equipment.
  • Determine the direction of the impact for each account. A: Cash decreases, Equipment increases.
  • Write the accounting equation and show how this transaction affects the equation. A: Assets = Liabilities + Owner's Equity. This transaction decreases assets (Cash) and increases assets (Equipment) by the same amount, so the equation stays in balance.