extended accounting equation 2

Received cash investment from shareholders to start business in exchange for ordinary shares

• Decrease in liabilities and increase in equity/capital

• Increase in assets and increase in equity/capital

• Increase in assets and decrease in equity/capital

Paid monthly rent by cash

• increase in assets (cash) and decrease in expenses (rent)

• increase in assets (cash) and increase in expenses (rent)

• Decrease in assets (cash) and increase in expenses (rent)

Purchased equipment on credit from account payable

• Increase in assets (equipment) and increase in liabilities (account payable)

• Decrease in assets (equipment) and increase in equity (capital)

• Decrease in liabilities (account payable) and increase in assets (equipment)

Brought in personal car for the use of the business

• Decrease in assets (car) and increase in liabilities (account payable)

• Increases in assets (car) and decrease in equity (capital)

• Increase in assets (car) and increase in equity (capital)

Paid dividends by cheque

• Decrease in assets (bank) and increase in revenue (dividend received)

• Decrease in assets (bank) and increase in expenses (dividend paid)

• Increase in equity (capital) and decrease in assets (bank)

owner took some goods for his personal use

• Increase in drawings and decrease in expenses (purchases)

• decrease in drawings and increase in expenses (purchases)

• Decrease in liabilities and increase in equity

paid personal insurance by cash

• debit insurance, credit cash

• debit cash , credit drawing

• debit drawings, credit cash

Purchased additional equipment for cash

• debit purchase, credit cash

• debit cash, credit equipment

• debit equipment, credit cash

Received cash from credit customer

• debit account receiveable, credit cash

• debit cash, credit account receiveable

• debit cash, credit account payable

Received purchase invoice on credit from Amirul naeem

• debit asset, credit Amirul naeem

• debit purchases, credit Amirul naeem

• debit cash, credit account payable