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Hello professor,
i dont get this question.
The transaction of Alis new business in its first week were as follows:
1. Commenced business with the intorudcion of 1000$ cash
2. Paid 350 $ rent
3. purchaed a delivery van for 400$ cashSo i am confuesd with number 3.
it says: Assets= Equity +Liability650 (400-400)= 650+0
Why is like this can you explain me, because for me this would be, cash decreased for 400, and also payables to suppliers. i dont get number three.Thank you
Buying the van means that assets (van) increase by 400, but paying cash for the van means that assets (cash) decrease by 400.
Have you watched my free lectures on this? The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
for 5) TRANSACTION they told this Purchased goods for $300 cash
The purchase represents the recognition of a new asset (inventory) and a corresponding reduction in cash, so there is no change in the accounting equation, only a change in the composition of the assets. It has a reduced cash balance but now has inventory at a cost of $300.
Assets = Equity + Liabilities
1650 = 650 + 1000I do not get this q, so if i pruchased goods, then cash is reduced for 300, and inventory is in plus for 300 Right?
Thnk you
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