Each transaction is analyzed to determine its effect
on the equation and on the specific financial position elements. Transactions
4, 5, and 6 are revenue and expense transactions. Revenues and expenses (and
gains and losses) are events that cause owners' equity to change. Revenues
and gains describe inflows of assets, causing owners' equity to increase.
Expenses and losses describe outflows of assets (or increases in liabilities),
causing owners' equity to decrease.
1. An attorney invested $50,000 to open a law office.
2. $40,000 was borrowed from a bank and a note
payable was signed.
3. Supplies costing $3,000 were purchased on
account.
4. Services were performed on account for
$10,000.
5. Salaries of $5,000 were paid to employees.
6. $500 of supplies were used.
7. $1,000 was paid on account to the supplies
vendor.
In the table below, enter the amount of each of the following transactions
under the appropriate column: |
