Presented below are three business transactions. For each column, indicate whether the transactions increased, decreased, or had no effect on assets, liabilities, and owner’s equity. Assets Liabilities Owner’s Equity (a) Purchased supplies on account. (b) Received cash for performing a service. (c) Paid expenses in cash.

Accounting equation is represented by:

Assets = Liabilities + Owner's Equity

Following would be the journal entries:

(A) Purchases supplies on account:

Purchases A/C Dr.

To Accounts Payables A/C

(Being credit purchases recorded)

The effect would be owner's equity will reduce and liabilities would increase by the same amount.

(B) Received cash for performing a service

Cash A/C Dr

Service Revenue

(Being cash received for services provided recorded)

The effect would be an increase in assets and increase in owner's equity as a result of increase in profits.

(C) Paid expenses in cash

Expenses A/C Dr.

To Cash A/C

(Being expenses paid in cash recorded)

The effect would be a reduction in assets and reduction in owner's equity by the same amount.