Question

You will be presented with five transactions, and for each transaction, you will be asked to identify the appropriate accounting element and the change for each element. These transactions will be presented separately.

1.

For each of the descriptions below about The Company, identify the appropriate accounting element(s) and what direction they are moving. Note: There will be two questions for every description.

The Company paid $500 (a) in cash for (b) telephone services used the previous month.

a) Accounting Element:(pick one) (Asset, Liability, Common stock, Revenue, Expense, Dividend)/ Direction of Movement:(pick one) ( Increasing, decreasing)

b)Accounting Element:(pick one) (Asset, Liability, Common stock, Revenue, Expense, Dividend)/ Direction of Movement:(pick one) ( Increasing, decreasing)

2.

For each of the descriptions below about The Company, identify the appropriate accounting element(s) and what direction they are moving. Note: There will be two questions for every description.

One of the owners (a) received more stock for contributing (b) equipment worth $25,000 to The Company.

a) Accounting Element:(pick one) (Asset, Liability, Common stock, Revenue, Expense, Dividend)/ Direction of Movement:(pick one) ( Increasing, decreasing)

b)Accounting Element:(pick one) (Asset, Liability, Common stock, Revenue, Expense, Dividend)/ Direction of Movement:(pick one) ( Increasing, decreasing)

3.

For each of the descriptions below about The Company, identify the appropriate accounting element(s) and what direction they are moving. Note: There will be two questions for every description.

The Company (a) provided services to customers for $50,000 (b) in cash.

a) Accounting Element:(pick one) (Asset, Liability, Common stock, Revenue, Expense, Dividend)/ Direction of Movement:(pick one) ( Increasing, decreasing)

b)Accounting Element:(pick one) (Asset, Liability, Common stock, Revenue, Expense, Dividend)/ Direction of Movement:(pick one) ( Increasing, decreasing)

4.

For each of the descriptions below about The Company, identify the appropriate accounting element(s) and what direction they are moving. Note: There will be two questions for every description.

The Company (a) owes an attorney $1,000 for (b) legal services previously received.

a) Accounting Element:(pick one) (Asset, Liability, Common stock, Revenue, Expense, Dividend)/ Direction of Movement:(pick one) ( Increasing, decreasing)

b)Accounting Element:(pick one) (Asset, Liability, Common stock, Revenue, Expense, Dividend)/ Direction of Movement:(pick one) ( Increasing, decreasing)

5.

For each of the descriptions below about The Company, identify the appropriate accounting element(s) and what direction they are moving. Note: There will be two questions for every description.

The Company (a) purchased inventory costing $200,000, they will (b) pay their supplier next month.

a) Accounting Element:(pick one) (Asset, Liability, Common stock, Revenue, Expense, Dividend)/ Direction of Movement:(pick one) ( Increasing, decreasing)

b)Accounting Element:(pick one) (Asset, Liability, Common stock, Revenue, Expense, Dividend)/ Direction of Movement:(pick one) ( Increasing, decreasing)

Answer 1

1. (a) Accounting element : Asset

Direction of movement : Decreasing

(b) Accounting element : Expense

Direction of movement : Increasing

2. (a) Accounting element : Common Stock

Direction of movement : Increasing

(b) Accounting element : Asset

Direction of movement : Increasing

3. (a) Accounting element : Revenue

Direction of movement : Increasing

(b) Accounting element : Asset

Direction of movement : Increasing

4. (a) Accounting element : Liability

Direction of movement : Increasing

(b) Accounting element : Expense

Direction of movement : Increasing

5. (a) Accounting element : Asset

Direction of movement : Increasing

(b) Accounting element : Liability

Direction of movement : Increasing