Answer:
a. Increase both an asset and capital stock.
Issuance of common stock increases the cash as assets and common stock as a capital stock.
b. Increase both an asset and a liability.
Supplies purchased on account increases the Inventory as an asset and Increases the payable as a liabilities.
c. Increase one asset and decrease another asset.
Maturity of an Investment in debt instrument, Increases the cash as an asset and decreases the investment as another asset.
d. Decrease both a liability and an asset.
Payment to supplier decrease the account payable as a liabilities and cash as an asset.
e. Increase both an asset and retained earnings.
Cash Sales Increases the cash as an asset and Net profit as a retained earning.
f. Decrease both an asset and retained earnings.
Sales return decreases the account receivable as an asset and net profit as a retained earning.
The descriptions of transactions that achieve each of the following purposes are as follows:
a. The issuance of stock via cash increases the asset (Cash) and the Capital Stock.
b. The issuance of bonds for cash will increase the asset (Cash) and Bonds Payable with the same amount.
c. When cash is received from customers, the asset (Cash) increases, while another asset (Accounts Receivable) decreases with the same amount.
d. When the company settles a liability (bond payable), the liability decreases and (Cash) an asset decreases.
e. A sale transaction increases the assets (Cash or Accounts Receivable), increases Retained Earnings..
f. The cost of goods sold decreases an asset (Inventory) and Retained Earnings. An expense also decreases an asset (Cash) and Retained Earnings.
Thus, every transaction has a dual effect on the accounting equation.
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