analyzing transactions\nidentify how the accounting equation is affected by each transaction\nassets =…

analyzing transactions\nidentify how the accounting equation is affected by each transaction\nassets = liabilities + equity\n1. cash is paid to suppliers for a previous purchase\n2. dividends are paid to shareholders\n3. cash is received for orders on account\n4. a bank loan is obtained

analyzing transactions\nidentify how the accounting equation is affected by each transaction\nassets = liabilities + equity\n1. cash is paid to suppliers for a previous purchase\n2. dividends are paid to shareholders\n3. cash is received for orders on account\n4. a bank loan is obtained

Answer

Explanation:

Step1: Analyze cash - payment to suppliers

Cash (an asset) decreases and accounts payable (a liability) decreases. So assets decrease and liabilities decrease.

Step2: Analyze dividend payment

Cash (an asset) decreases and retained earnings (part of equity) decreases as dividends reduce equity. So assets decrease and equity decreases.

Step3: Analyze cash - receipt for orders on account

Cash (an asset) increases and accounts receivable (an asset) decreases. Net change in assets is zero.

Step4: Analyze bank - loan obtaining

Cash (an asset) increases and loans payable (a liability) increases. So assets increase and liabilities increase.

Answer:

  1. Assets decrease, Liabilities decrease
  2. Assets decrease, Equity decrease
  3. No net change in assets
  4. Assets increase, Liabilities increase