Your firm decides to increase equity by $1,000,000. Which of the following sets of transactions could...

Your firm decides to increase equity by $1,000,000. Which of the following sets of transactions could NOT be appropriate ledger entries?

Increase equity by $1,000,000 and increase long-term assets by $1,000,000

Increase equity by $1,000,000, decrease long-term debt by $500,000, and increase inventory by $500,000

Increase equity by $1,000,000 and increase inventory by $1,000,000

All of these transactions would be appropriate.

Expert Solution

Answer: All of these transactions would be appropriate.

Explanation:

The double entry is correct for all the above transactions as they would satisfy the accounting equation Assets = Liability+Equity.

1) Increase equity by $1,000,000 and increase long-term assets by $1,000,000

Assets [long term assets] increase by 1000000 followed by increase in equity, which keeps the accounting equation balanced.

2) Increase equity by $1,000,000, decrease long-term debt by $500,000, and increase inventory by $500,000

Asset [inventory] increases by $500000; debt decreases by $500000 and equity increases by $1000000. This also balances the accounting equation as it is effectively

500000 [assets] = 1000000 [equity] - 500000 [debt]

3) Increase equity by $1,000,000 and increase inventory by $1,000,000

Assets [inventory] increase by 1000000 followed by increase in equity, which keeps the accounting equation balanced.

jeff jeffy answered 1 year ago

Which one of the following transactions will result in a change in the equity of an...

Which one of the following transactions will result in a change in the equity of an entity operating on a bank overdraft? A. Property bought on credit. B. A direct deposit of the salary of an employee into his/her bank account. C. A direct deposit in the bank account of an entity by a creditor in payment of his/her account. D. Receive money from a debtor in payment of his/her account. E. A cheque issued for payment of assets purchased...

Which one of the following sets of quantum numbers could be those of the distinguishing (last)...

Which one of the following sets of quantum numbers could be those of the distinguishing (last) electron of Mo? a) n = 4, l= 0, ml= 0, ms= +1/2 (b) n = 5,l= 1, ml= 9, ms= -1/2 (c) n = 4,l= 2, ml= -1, ms= +1/2 (d) n = 5,l= 2, ml= +2, ms= -1/2 (e) n = 3,l= 2, ml= 0, ms= +1/2 I KNOW THE ANSWER IS C BUT PLEASE EXPLAIN WHY THAT IS THE ANSWER AND...

The firm decides to raise $30 million by selling equity and debt. The investment bankers hired by your firm contact potential investors and come back with the following numbers:

The firm decides to raise $30 million by selling equity and debt. The investment bankers hired by your firm contact potential investors and come back with the following numbers: Debt that pays $1 million each year for 10 years and pays $18 million at maturity currently sells for $20 million. Equity that pays expected dividends of $1.2 million starting next year and growing at a rate of 3 percent per year thereafter sells for $10 million. Assume the firm’s...

Which of the following statements is correct for a U.S. importing firm that owes GBP 1,000,000...

Which of the following statements is correct for a U.S. importing firm that owes GBP 1,000,000 payable in three months? Assume the company's WACC is 12% p.a. and the U.K. deposit rates are 8% p.a. The current spot rate is USD1.45/GBP and the 3-month forward rate is USD1.50/GBP. The U.S. importer can lock the payable at the cost of USD 1,450,000 using a forward contract The forward hedge is more expensive than the money market hedge for the importer Using...

Which of the following actions could increase the balance in the Paid-In Capital in Excess of...

Which of the following actions could increase the balance in the Paid-In Capital in Excess of Par—Common account? Select one: A. cash dividend declared B. purchase of treasury stock C. stock split D. 10% stock dividend declared Intangible assets ________. Select one: A. are always expensed through amortization B. do not include goodwill C. always have a definite life D. are recorded at cost when purchased externally Preferred stockholders ________. Select one: A. are guaranteed that they will not have...

Which one of the following will increase the return on equity as computed using the Du...

Which one of the following will increase the return on equity as computed using the Du Pont identity given that all else is held constant? Multiple Choice An increase in costs A decrease in sales A decrease in net income A decrease in total equity An increase in total assets

According to CAPM, which of the following would increase a company's cost of equity if the...

According to CAPM, which of the following would increase a company's cost of equity if the company had origanlly calculated Ke using: Rf=1.5%, Beta = 1.31, and the market risk premium is 8%? 1- Increasing Beta 2- Increasing Rf 3- Decreasing Rf 4- Increasing the rick on the market answer options - a- 1 and 2 b- 1, 2, and 3 c- 2, 3, and 4 d- 1, 3, and 4

Which of the following sets of quantum numbers are not allowed? For the sets that are...

Which of the following sets of quantum numbers are not allowed? For the sets that are incorrect state what is wrong. For the sets that are correct, give the orbital designation (eg 1s, 2px). n l ml ms a) 2 1 +1 +1/2 b) 2 2 -1 -1/2 c)75-4 0 d) 4 2 -2 +1/2

You need $1,000,000 to expand your business. Which method, debt or equity financing would you pursue...

You need $1,000,000 to expand your business. Which method, debt or equity financing would you pursue and why? Is now a good time to invest in the stock market? Why or why not? You have just inherited $1,000,000. What would you do with the money and why? What questions should you ask before investing in a mutual fund? What questions should you answer before investing in stocks?

Increases in which of the following (could be more than one) increase the natural rate of...

Increases in which of the following (could be more than one) increase the natural rate of unemployment? 1. Employment protection legislation 2. Responsiveness of wage demands to unemployment. 3. The product market power of firms. 4. The efficiency of the hiring process in the labour market.

Question