The transactions below relate to XYZ Delivery Company. Indicate the effect of ea

Question

The transactions below relate to XYZ Delivery Company. Indicate the effect of each transaction on the accounting equation (i.e., assets, liabilities, and equity). Enter the number corresponding to your answer in the box provided. Answer choices may be used once, more than once, or not at all.

Question 8 options:

XYZ received $5,000 cash for services to be performed for a customer next month.

The firm performed $3,000 of delivery services for a customer who agreed to pay XYZ Company next month.

XYZ Company purchased office supplies for $1,900 cash.

XYZ purchased $40,000 worth of store equipment from Libby Company by paying $8,000
cash and agreeing to pay the remainder within six months.

XYZ purchased $7,000 of newspaper advertising and agreed to pay the newspaper in thirty days.

assets increase; liabilities increase; equity no effect

assets increase; liabilities no effect; equity increase

assets no effect; liabilities no effect; equity no effect

assets decrease; liabilities decrease; equity no effect

assets no effect; liabilities increase; equity decrease

assets decrease; liabilities decrease; equity decrease

assets no effect; liabilities decrease; equity increase

assets increase; liabilities increase; equity increase

assets decrease; liabilities no effect; equity decrease

XYZ received $5,000 cash for services to be performed for a customer next month.

The firm performed $3,000 of delivery services for a customer who agreed to pay XYZ Company next month.

XYZ Company purchased office supplies for $1,900 cash.

XYZ purchased $40,000 worth of store equipment from Libby Company by paying $8,000
cash and agreeing to pay the remainder within six months.

XYZ purchased $7,000 of newspaper advertising and agreed to pay the newspaper in thirty days.

1.

assets increase; liabilities increase; equity no effect

2.

assets increase; liabilities no effect; equity increase

3.

assets no effect; liabilities no effect; equity no effect

4.

assets decrease; liabilities decrease; equity no effect

5.

assets no effect; liabilities increase; equity decrease

6.

assets decrease; liabilities decrease; equity decrease

7.

assets no effect; liabilities decrease; equity increase

8.

assets increase; liabilities increase; equity increase

9.

assets decrease; liabilities no effect; equity decrease

Explanation / Answer

Question Corresponding no. XYZ received $5,000 cash for services to be performed for a customer next month. 1. The firm performed $3,000 of delivery services for a customer who agreed to pay XYZ Company next month. 3. XYZ Company purchased office supplies for $1,900 cash. 9. XYZ purchased $40,000 worth of store equipment from Libby Company by paying $8,000 cash and agreeing to pay the remainder within six months. 8. XYZ purchased $7,000 of newspaper advertising and agreed to pay the newspaper in thirty days. 5.

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