00:02
So we're given the following information and we need to determine whether there is an increase or decrease or no effect on our assets, liabilities and equities.
00:12
Right.
00:13
Now, this is all part of the accounting equation.
00:16
And what we need to remember is that with every transaction, there is always at least two accounts involved, right? so that's all we're going to be considering.
00:26
So with the first one, we paid cash for expenses.
00:29
So because we paid cash, it means that the bank is a business.
00:32
Involved, right? so we're deducting money from the bank.
00:35
So it means that there's a decrease in our assets, right? and these expenses are part of our income statement, right? that's your provident laws, retained earnings, and retained earnings affects equity, right? so when we pay expenses, it means that we are increasing our expenses, right? and expenses decrease our retained earnings, right? means equity will also decrease, right? and there is no effect on liabilities, right? then the next one is sold common stock for cash.
01:17
Now, because we sold them for cash, it means we received cash...