Selected Transactions Completed by a Proprietorship Are Described Below

question 190

Essay

Selected transactions completed by a proprietorship are described below. Indicate the effects of each transaction on assets, liabilities, and owner's equity by inserting "+" for increase and "−" for decrease in the appropriate columns at the right. If appropriate, you may insert more than one symbol in a column.

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Definitions:

Effective Rate

The effective rate, often referred to as the annual equivalent rate, measures the real return on savings or the real cost of a loan, taking into account the effect of compounding interest.

Semiannual Interest

Interest calculated or paid twice a year, often related to bond or loan agreements.

Straight-Line Method

A method of calculating depreciation of an asset where the expense is uniformly spread over its useful life.

Fiscal Year

A 12-month period used for accounting purposes that may not coincide with the calendar year.