BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -When goods are purchased on credit, stock increases which is an asset and creditors increase, which is a liability. Q. Give an example for each of the following types of transaction. (i) Increase in one asset, decrease in another asset.

Detailed explanation-2: -For example, when a company borrows money from a bank, the company’s assets will increase and its liabilities will increase by the same amount. When a company purchases inventory for cash, one asset will increase and one asset will decrease.

Detailed explanation-3: -Purchasing supplies on account increases supplies (i.e., increases assets) and increases a liability account called accounts payable. Thus, asset increase and liabilities increase.

Detailed explanation-4: -A credit is always positioned on the right side of an entry. It increases liability, revenue or equity accounts and decreases asset or expense accounts.