Question

2.         For each of the following items indicate whether the transactions listed below increased (+), decreased (–) or had no effect (0) by inserting the appropriate symbol.

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		Net Income	Assets	Liab.	Owners' Equity	Cash Flows
a.	Sold equipment for cash at a gain
b.	Recorded amortization expense on patents
c.	Paid cash for minor repairs to an asset
d.	Recorded a revenue expenditure incurred on account
e.	Paid cash to remove old building from land being prepared for use

Answer 1

increased (+), decreased (–) or had no effect (0) by inserting the appropriate symbol.

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		Net Income	Assets	Liabilities	Owners'Equity	Cash Flows
a.	Sold equipment for cash at a gain	+ (gain)	+ (Cash)	0	+ (Retained earnings)	+
b.	Recorded amortization expense on patents	-- (Expense)	-- (Patent)	0	-- (Asset decrease)	0
c.	Paid cash for minor repairs to an asset	-- (Expense)	---- (Cash)	0	-- (Asset decrease)	--
d.	Recorded a revenue expenditure incurred on account	-- (Expense)	0	+ (Since it is on account)	-- (Liability increased)	0
e.	Paid cash to remove old building from land being prepared for use	0	0 (Land value increase nullifies Cash decrease)	0	0 (Land increases nullifies cash decrease)	--

Owners equity = Assets - Liabilities