For Each of the Following Transactions, Identify the Effects as Reflected

question 117

Essay

For each of the following transactions, identify the effects as reflected in the accounting equation. Use "+" to indicate an increase and "-" to indicate a decrease. Use "A", "L", and "E" to indicate assets, liabilities, and equity, respectively. Part A has been completed as an example. $$\begin{array} {| l | l | l | l| } \hline\text { a. } & \text { L. Chester invested } \$ 100,000 \text { in a corporation. } & + \mathrm { A } & + \mathrm { E } \\\hline \begin{array} { l } \text { b. }\end{array} & \begin{array} { l } \text { Land was purchased for } \$ 50,000 . \\\text { A down payment of } \$ 15,000 \text { eash was made and a note was } \\\text { signed for the balance. }\end{array} & & \\\hline \text { c. } & \text { Services were rendered to customers for cash. } & \\\hline \text { d. } & \text { A building was purchased for cash. } & & \\\hline \text { e. } & \text { Supplies were purchased for cash. } & & \\\hline \text { f. } & \text { Paid the office secretary's salary. } & & \\\hline \text { g. } & \text { The amount owed on the land from Part (b) was paid. } & & \\\hline\end{array}$$

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Definitions:

Futures Price

The agreed-upon price for a financial instrument or commodity to be delivered and paid for at a future date.

Spot Price

The current market price at which an asset can be bought or sold for immediate delivery.

Profit

The financial gain achieved when the amount earned from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

Futures Contracts

Standardized legal agreements to buy or sell something at a predetermined future date and price, often used for hedging or speculation purposes.