Exercise 3
Analyze each of the following transactions by indicating which accounts are affected and whether
they will increase or decrease. Transaction a) is completed as an example.
a) The company’s owner, Mani Havarez, invested cash into the business.
b) Received cash in advance for future services.
c) Purchased a one-year insurance policy.
d) Collected cash for payment of customer account.
e) Performed a service on account.
f) Equipment is purchased by issuing a 5-year note payable.
Transaction
Accounts
Increase
Decrease
a)
Cash
x
M. Havarez, Capital
x
b)
c)
d)
e)
f)
