The Following Transactions Represent Part of the Activities of Lewis

question 160

Essay

The following transactions represent part of the activities of Lewis Company for the first month of its existence. Indicate the effect of each transaction upon the total assets of the business by one of the following phrases: increased total assets, decreased total assets, or no change in total assets.
1. The owner invested cash to start the business.
2. Purchased a computer for cash.
3. Purchased office equipment with money borrowed from the bank.
4. Paid the first month's utility bill.
5. Collected an accounts receivable.
6. Owner withdrew cash from the business.

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Definitions:

Variable Cost

Variable costs are expenses that vary directly with the level of production or sales volume, such as materials and labor costs.

High-Low Data

A method used in various analyses that involves observing the highest and lowest data points to assess trends or calculate variables.

Units Produced

The total quantity of units manufactured by a company during a specific period.

Relevant Range

The relevant range refers to the span of activity or volume within which the assumptions about cost behavior hold true.