what-is-the-impact-on-the-accounting-equation-when-a-payment-of-account-payable-is-made-a-both-sides

Question

What is the impact on the accounting equation when a payment of account payable is made?
A. both sides increase
B. both sides decrease
C. only the Asset side changes
D. neither side changes

Puneet Prajapati · Accepted Answer

Okay, so let&#x27;s start the solution. Okay? But before that, giving draw our basic grounding, wishing so that we can understand it clearly the guard the problem is seeing and how movie get our solution. So as a matter of this is Ah, as a matter of solution, this is a busy, counting question we have in front of us. So who make this more clear? I would just give you example looking that to suppose you have a business off. He&#x27;s heading video games okay to customers. And you have gender to live in new or you have soared video games for $20,000. But still, your customers are really transfer tea. And for that you have given them time so that you will be paid off. So you have given time of Lexie. 13 is so after 30 days, they will pay you off against that. You sold to them so you will look, you are likely to receive $20,000 from the premier customers. So this will be your a sex. Bless you have some extra cash in your in your cash drawer for purchasing new meat again. So are making came into your employees Okay, so you have excess cash off. Let&#x27;s hit $10,000. So important you have Essex. 0 $30,000. Okay, thank you. Let&#x27;s suppose you have purchased some video games out of the country like you have imported some very, very advanced video games that was not available in your country but outside of the but it evolved. Those were available out of the country. So you have imported them. But still you have imported them. But you have not paid those suppliers store that will become your liability. The amount of it you&#x27;re likely to receive will be a A sect. The amount that you are likely to pay for which you have a very really benefit will be considered. It&#x27;s lively piece. So let&#x27;s suppose they are like $20,000. You $20. $20,000. You have to pay to suppliers okay for which you have imported deep reading lives. Okay, No words. The rebar. So as of now, we have we have 2000 minus $20,000. Okay? No, in very, very simple terms, it is the takeaway from business. You can also write it down, take away from business after being or liabilities. Okay, let&#x27;s suppose you after 2000 in your hand after one month, Okay. After receiving the one from the customer, and after something of the cash balance, you have 30,000 30,000 and acting. And after that, you have to do it. You are. You have paid $20,000 or the Lebanese you have incurred. Okay, so what? The moment you have at the end off at the end of the day after paying off the library&#x27;s from your sex. This is the amount you have generated out off your business. Okay? After being off the liabilities now, you this 10,000 is totally yours. Okay? This is what you have gained from a business. No, this is actually also known as the network. All the network can be derived in many, many ways in accounting counsel as well as in finance terms. However, for as of now, neck forthis, I said minor celebrities. Simple, as simple as that. Okay, but for the current problem, what we have, what we have. So for that also be able to draw over basic accounting question. Get this solution very clearly. Okay. Okay. So it has been said that doesn&#x27;t account the people has been paid. So what will be the effect off that transaction on the both sides of the question? Both sides of the questioning. This is the totally question. Both sides means this site plus this side. Okay. What What is the insect? You know you know it very well. What? Typically, items are considered in the sex, you know it. Okay. No, really. Interpret the problem. Get dissolution. Okay, so now, Wendy, account people so account people will be considered us live in peace. Now, what is a con, people? Let&#x27;s understand. They suppose so. I have already told me that you&#x27;re wearing the business of selling redoing. So if you have imported Cem involving games outside of your country, okay. But you have not paid for such video games after you have imported them. Okay, So that will become a liability. You will have to pay them off to create your net for two more. Okay, More realizable. So if such a liabilities which have just increased after you have imported the video games and not and and you have not paid them, so those celebrities will increase. But after you will pay off the liabilities. They will decrease in liabilities. I make you light because because you are being off the liabilities. Is that clear? Totally. Okay. Now what will also happen? It will also happen that they will be a corresponding decrease in the SX side. Why? They&#x27;re so festival next second down that how will you? What type of a sect? What type of a set will get the priest after making the payment off liabilities? Then I will make you understand that. How will it go? How will we go out? I&#x27;ve told you that you have 10,000 of dollars in your hi. I&#x27;m before protecting anything. Okay. Before proceeding with anything, you have $10,000 as cash in your head, okay? No. If you are being liabilities, then of course this 20,000 you will receive later after 30 days. Okay, but this 10,000 is at your hand for disposal. So you&#x27;re really music, if you will use it. This is decreased. That is right. If you will pay your liberties, your libraries will get decreased. You&#x27;re a sex site. Will be the Lord. So good. At least. Okay, Leave. Leave. The impact only could be right now because it is not. It is not relevant. Another portion. Okay, so so therefore the encryption. So they will be The option is B both side degrees. Okay, that&#x27;s that&#x27;s all for the solution. Both side degrees means this side also. And the sales. Okay. Oh, we can also understand it any differently. Okay. Oh, let&#x27;s go with that. Okay, let&#x27;s go with that. That&#x27;s supposed we have $1000 off initially. Sex $500 off Mitchell Liberties. And that&#x27;s next. Yes, I wondered on yourself. It could be Am I correct? Okay. No. Let&#x27;s see the count, people. Which in the current caution is around $200. Okay, now, what is the deserting in sex? You $200 know libraries? Willard alternative is because this you reconsider, loved the under. Okay, so they affect this. I wondered. So we can say both sides decreased, like, 200. Okay, so that&#x27;s all for the current solution. Thank you.

Puneet Prajapati · Answer

Okay, so let&#x27;s understand the current problem. How to drive the solution. Okay, First of all, we will draw our basic accounting question which will help us in diving. The solution, okay, is it&#x27;s minus liabilities. He was still equity. Okay, so this is the basic accounting question we have in front of us. But what does this accounting question says? Let&#x27;s understand. Suppose you are in business of a restaurant making making very, very grateful delicious to the to your customers. Okay, so you have, you know, sorted. And you have also on land delivery segment to your customers. But sometimes what happened? Your customers say that I really, really I will pay you after some week or a month. Let&#x27;s suppose in that case also, however it is not. It is not possible in real boy. But let&#x27;s suppose for our example. Okay, so suppose your five customers have said that they will pay you are they will pay you off after a month. And that is the amount totaling off $10,000. Okay, $10,000. So before you sold before you sold off the foods and beverages to your customer, you will also have to buy the raw material. You know, raw material to process the actual food into the into the actual, you know, act a bill. Edible food. So you have purchase some some off the material from the suppliers. All 5000 but the among has not been paid yet. Please remember my words. The asset is the amount which you are likely to receive from your customers along it. That if you have, let&#x27;s say if you have initial cash balance off 5000 voters, that will also be considered as assets that you are actually owning. Okay, so the total assets will be $15,000. However, there there is only 5000 off level, please. Okay. The library Is that the amount which are still people? Let&#x27;s suppose you have incurred the telephone expenses for generally month off $1000. Okay, But you have come to know factory, but still and you have also Oh, you always have to pay for every expert telephone expenses. But the generally telephone expenses will be considered as your liberties nor of the celebrity by that. So because the because the time or the due date the due date for making Jen very telephone expense payment has bean passed off. So that is why the amount that which is due, which is due to be paid will be considered us liability. Okay, so what is the portion of equity? Actually, with $10,000 what is they? Could be. It is nothing, Berta. Take of it from the business in in in very, very symbolic downs. However, and Dale, we will understand this. Also that were the actually worked out, actually, components of the inquiry. But as of now, in very, very simple terms to make the question more interpret Table the cookie is a take of it from the business after being off all the ladies. Okay, Now let&#x27;s come to our question. We have understood what is the meaning off a sex. What is the meaning of liabilities? And what is the meaning off equity? Okay, Now let&#x27;s come to live with me in question, which is our, well, most concerned. Okay, so let&#x27;s most of all right, d question. So the question is asking from us that if let&#x27;s say we are likely to receive $10,000 which we have just stated. Okay, which we are. We have just stated that what type off the that we&#x27;re likely to receive $10,000 okay from other customers, which is that remote. And suppose we have libraries off $5000. So already cooties $5000. This is the peak of it. But the portion is saying like the supposed we have received 5000 from the customer who has received our four billion resurfaces. Okay, which the customer has paid $5000 to us who have received the benefit overs benefit of goods and services. So if let&#x27;s say I have to this it&#x27;s a tour. In total, I was having $15,000 bye. $15,000 at the initial level. I have. So I would like to hear $15,000. Okay, but know what happened? I have received $5000 from our customer. So what will happen? So this is the total amount we have right now in comes off amount feature which were likely to receive, plus the 5000 of the $5000 off the cash. We do have an hour cash drawer. So vehicle Dylan, the $5000 by there. So because we have received from our customers So 5000 is the amount which we have received from this from this 10,000. This one. Okay, this is the 5000 we have received. Now, if we are going to deduct the balance off the amount with which we&#x27;re likely to receive so they will be an occasion off the $5000 also. Why? That&#x27;s so Because we are receiving the cash from the customers. It is just electing effect. It will not effect any any off the element of the question right now. But let&#x27;s focus is I know it will be clear toe. Rick, you&#x27;re to most of you. But let&#x27;s understand it. In most elevated terms, let&#x27;s suppose if I have a set, okay, in next she that I will be going this minute because it would be, you know, convince him in that cheap. So I have a sex off 10,000. Okay, I have a sense of 10,000 I&#x27;m likely to receive. Okay. I&#x27;m like, you&#x27;re like you do receive $10,000. Some customer has paid, paired me off $5000 but this this amount will be reduced if the parents off the amount which were like to receive which were like to see will be reduced then against that, because there are double effect off the every financial transaction. The rules is the rules is the rule of accounting. Question. Please write it down so that you can we get a clear idea. What? I&#x27;m actually seeing the full effect off every financial conviction. Okay, so what is the double effect? First of all, David decrees in my balance of debtors that there&#x27;s that amount which from Azad the persons from which were likely to the city payment. Okay, so they will be degrees in a sex or they will be in the green in balance. Okay. And again, they would be double effect. So first affected, this seven effectively, they will receive the cash from our doctors. So that is clear. Okay, now let&#x27;s come to the basic counting, wishing so there will be no change. Buy that So because minus 5000 plus 5000 it will be both squared off. Okay? Minus plus equal to zero. 15,000. $15,000 of a six $5000 off liabilities will again come. Go $10,000. So initially it waas 15,000 minus five equals to $10,000. Let&#x27;s make it $10,000. Don&#x27;t confuse that via my going right. $10,000 in studio initial $5000 normal. That&#x27;s the case that $10,000 We have initially sex like cash, bus conductors and minus lively days. So it will be 10,000 lives. Okay, so there will be no change in the either side of the equations. There will be no change before doctors before the drug addiction situation. And that is after the damage institution. Okay, so the correct choice for problems in physics is D. Which says what? What does what does the choice de ces that neither of the site changes? Okay, decide remains constant. And this same remains constant after the transaction be ever recognized. Okay, so the correct choices problem 26 is the That&#x27;s all for the solution. Thank you.

Puneet Prajapati · Answer

Okay, so let&#x27;s understand the current solution. But given keys, first of all, people right over BC counting Grishin and from the F B. We&#x27;ll start with the institution. Okay. Okay, let&#x27;s see. We are We&#x27;re very, very willing to dealing the business off. Selling, selling close to our customers. Okay, in tow. Mainly textile business. But I don&#x27;t need a level, you know. So I do not have sufficient money to start the business. So what will I do? I will go to the misters. We go to my related Sze, I will go to my friends to raise the capital, to raise defendants to France to find to find my business. But Okay, so what happens? And a citizen amount? That s it is what What are the elements? First of all, I&#x27;m talking about them. Then we&#x27;ll move to the solution under six under a sex. Those are those amounts which are recoverable from anyone else, such as customers, depositors with whom we have deposited our money or the person&#x27;s the womb. We have advanced some off our cash reserves. Okay, Those recoverable amounts will be included in our sex and most importantly, cash in bank balance cash in bank balances. Less. I am writing. Bless. There is nothing. There isn&#x27;t a thing to confuse about. Get confused about it. It is just I&#x27;m, you know, trying to locate something else before writing anything. Okay, Gash bank balance. Bless. And you ballistics. No water. Then do ballistics. Let me show you. If I have to produce some clothes to say to our customers, we will have machines, the produce roads. We have vesting testing machine so that we can know that for type off. What type of quality? Off load via policing right now. Okay, for these are the items we will be. Oh, you know, listing under the under Tito sex. In contrast to their sex, the libraries are in contrast to asserts. Okay, in contrast to recovery bailamos lively Be able amount, sir. Considered in the landlady says outside. So there is no contrast against cash and bank balance. Okay, but I can write very precisely that it is sharp and long time dead like you take, you know, known for loan to purchase the house. Okay, yard leakers to purchase any type of property like that. So these amounts which are people after a certain period of time will be included in liabilities like, it is the money that you have to pay to someone for the benefits. You have a bit of a okay. No. What is that? Don&#x27;t equity. It includes capital greased. The officer Lawson. What is the meaning of capital? Raced everything. You very, very, very shortly. Okay, So capital raise beans. What? What amount of friends you have raised toe internally or externally, from within the organization. What from outside the organization that the money will be considered in equity. What we can also see very well include our profit and loss on during the period. In a pretty component, we can also it could be is also known as you can write it down. What I&#x27;m writing here. Okay. Take away from business off being all liabilities. Okay, I&#x27;m asking to write. You write down on all of this by because this becomes easier when you revise for your exams also. Okay, so these are the gums. Okay. Now let&#x27;s move to our main solution. What is our main solution? First of all, we will draw our basic question and exams also, wherever you go in most of the accounting concept, you will face accounting question as you are complimented. Topic to help you throughout the subject. Okay. No, the portion is asking those What will be the effect off issuing stocks. Okay. Issuing capital between stocks in exchange for escorts. First of all, I will brought a dragon for you so that you will be able to understand it. Matters like to suppose we have extent company okay, Willing toe start new loading business. Okay, we&#x27;re chart off firms as off. No. So it will Porto a company. The next company says that that ex company say&#x27;s toe a complete that ex company will give shares Love X company go Any company okay? And Indra done what he has to do. They will give a sex who x company who find the business purpose. Okay, this is very very this This transaction is very, very known to you that what&#x27;s happening here in the red line, the eight companies is giving a sex to x company so that I said sometimes all you can say, you know, cash bank balance machinery to start the new business. Okay, but for text company is giving to a shares off X shares of ex company to a company. These are ownership off issuing company who silencing Go. We will understand the shares. The Tom she is detailed capital that some provincial capital and like other terms in later future. Then we will face much detail problem. But just understand for the same Sekoff this solution that X is issuing begins it 10% 10% ownership off itself off ex company do a complete on in exchange ex companies receiving ex sex from a comic who started a project, that&#x27;s all. Okay, so they will be increasing its excite by there. So because the area here, the company is giving a search to X company. Okay, so they will be in Greece. Dinosaurs? That&#x27;s $1000. Okay, so there are no liabilities? I think so. Because there is no recoverable PayPal a mouse. However, as I have started here, that vote number the capital raised whatever defendants you will raised. You will include that amount here as villains. Okay, so you&#x27;ve been in $2000 here. So you have raised the capital. Who? The extent of $1000 from a company. You have received a sex from a come from a company. So the extent off $1000. So they&#x27;re on both side in Greece. We&#x27;ll get now. Let&#x27;s form the solution. If there are both side in grease. So the correct choice. Just if you have industrial this transaction, if you have in the strictest election, then it would not have bean much difficult. Oh, I understand this calculation, which I have just experience. I am, I am taking $1,000,000 just isn&#x27;t just as an example, Jubal, you can think it like this. Also, like we have received, the, uh, received has subsided. Plus, like we have received a sensible. So we&#x27;ll make in addition to the Essex if we have so And here we have sure shares are assured the ownership off our company to someone else like a complete. So we will also sure. So the larger make in addition to the duty Also, that is right. There is both side in Greece. Okay, so the correct choice for probably 28 days. Thank you

Puneet Prajapati · Answer

Okay, so let&#x27;s understand the current problem. Okay? So to begin with, we will start with the, you know, counting the basic accounting question. And then we will move to our main solution. Okay, so it&#x27;s a said minus lovely piece equals store equity. Okay, so let&#x27;s say to understand this basic accounting question. First of all, we need to understand that. What does the counting the question say&#x27;s Okay, so let&#x27;s suppose you are Oh, you are dealing in the business off selling real games. Okay. By selling the video game to the customers, you have generated revenue off housing. $1000. Okay, $1000. Bye bye. I every $1000 under the asset, I will tell you. So let&#x27;s suppose that you have sold the video games to your customers, but you are able to receive them out. Attn. This part okay, your customer is likely to pay you off. Let&#x27;s after 30 days of Peter. Okay, So whatever the amount that is receivable active at the future pointing, dying, that amount is known as a sec. Okay, So even if you have sold the video games to the customers, but still you have not been paid that amount is irrecoverable from the customer, so that will be considered as your I said. Okay, let&#x27;s suppose in processing the material of video games, do you need to purchase the material from someone else like your supplier so that you can persist the video games in tow? Saleable product. Okay, so for that you have imported someone from the outside of the country, okay? And you have important material off $500. You have important material of $500 by I have returned $500.50 head liabilities because a liability is an amount people for the for the benefits that has bean avail. Okay, Lake the or in simple terms, we can say liabilities and is an amount which is people like the future point at the future at a future point in later. Okay, Now, what is the equal devotion? $500 housing minus. I wondered because 500. What is this fight? One day? You can completely, you know, interpret this through the question that so they could be thrown business after being off all the ladies. Okay, so let&#x27;s support if you have $1000 deficits. Do you have Thompson, owners of physics. How that are They&#x27;re recoverable from the customers, but no. What happened? You have also liabilities off 502. You have to obey them. So after netting the recoverable and table amounts, you have $500 of equity backed that. It&#x27;s your personal amount that you will take up with this amount. A killer who, because that is a lian free amount you in free means nobody has the right to, you know, detached that amount from yourself. Because it is that take away from the business after being off all the liabilities. Okay, so we have understood the basic part of the question. Now, let&#x27;s move, lover. Basic salute. Those main solution. Okay, so in the portion we have been asked, that vote will be the effect on the both sides of the equation if us is hookers. Okay. That is to a very simple part. I mean, you have. Okay, he&#x27;s the potion Say&#x27;s that the sale even has been aboard. So let&#x27;s say it is a guy I see. Okay. Now, if there is a cash sale, okay, we have initial. I think we&#x27;re not supposed to write it here. Okay, let&#x27;s first, you know, just get the initial initial initial Ramones like they are in tow. You know, business offices selling. You do games to other customers. So we have initial amounts. No more confused. I&#x27;m just taking them all from this one. This one in this way. $1000 opposites. They&#x27;re recoverable. $500 off liabilities. 500 on herself, Equity. Okay, Now you have understood the basic concept of accounting. Question? No, let&#x27;s move to the solution. Okay, let&#x27;s suppose we have a cash sale of 500. Okay? No, if I will sell the video game, and against that, I will receive cash. What will happen? My sex. I will also increase because the asset also include the cash available with the business entity. Let&#x27;s suppose let&#x27;s suppose we have a company, Okay, but the s excited will also include the cash available in the business like we used to keep cash, you know, hard cash in the cash drawers. Or we can say our bollards are some some other type of stuff in which we can, you know, keep outta cash. So they will be $500 sale if if If we have you know, made a sale of $500 in cash than assert side of Greece. They will be more liability by there. So because we have because for for making this sale, we have incurred no type off liability. Okay? We have because I&#x27;m just supposing that I&#x27;m just making this is an example to make the solution here. Okay. So as we will sell the video game on cash on a cash basis So we will realize that cash around off 500 which will be included in the outside as the cash balance. Okay. No one the opposing side of the question. What will happen? See the motive for the businesses to own profit and what is actually profit? Nothing in the profit is simple. Everyone knows this. Okay, See, it&#x27;s minus expenses. So if vehicle in Greece ever since, they will be increasing profits off, if you will in Greece, other expenses, they leave degrees in Crawford&#x27;s. Okay, So, like flies, if there is increase in sales increasing states. So the secret about that will be your takeaway. After paying off all the liabilities be greater by that. So because you have made sales more than before. Okay, like you have made extra sense or you are making revenues, so your take of it will be greater. It is very, very office. Right. So you&#x27;re 500 will be. I do. Do you? In your big of it. Okay. So words the neck current. What is the net effect of the tradition? It&#x27;s this one becomes 15 under. This will be a sickness 500 and this will be $1000. Okay, so what is the net effect? What is the net effect on the both sides of the question? This this we have as the initial level. This we have after considering the transaction. So you can see there is a 15 and $500 increase. There is also $500 increase. So the correct solution we can conclude for the problem. 27 is e. Okay, so the correct choice. Okay. So you can derive the deny dissolution by forming the, you know, basic complication. Because without informing the question, you will not. You will not reach anybody. Anything. Okay. So tax are for the current solution. Thank you.

Puneet Prajapati · Answer

Okay, so let&#x27;s understand. Living backed off the current, even which has been stated in the problem. First of all, we will start with our basic counting the question, and then we will move forward to the problem. Okay, so a set minus liabilities week wants to equally. So this is the basic Compton question. First of all, I will give you a brief about were the quick accounting question sees Lecter. Suppose we have a business off clothing or business off selling phones. So we have We are likely to receive $1000 from a customer. Okay, $1000 from a customer, as we have as we have sold over our elementary in terms of form. So the customer so that we are likely to receive $1000 in terms of a set. Okay. So that I said it has the meaning that we have. You&#x27;re likely to receive the amount from the customer now then generally, things such a sex. First of all, we have board, the phones are bored. Some of the materials from office supplier so make this area to the customer. So viva Mort. Some material, like, you know, assembly material, or make the phone assembled before before the selling to the customer. So we have generated the liabilities like we have not paid among to our supplier for which we ever really benefit So such liabilities. Or we can say such amount that has not been paid yet a liabilities and among which has not been paid off, for which we have a really benefit. So with this $500 So what is the what is the actual value of business or begins? What is the actual take of it from the business after paying off the liabilities from the A sex? Okay, so $500. Because after being off the liabilities of 500 what we will have the will have $500 in other Hank that will be over. Take away from the business. Okay, Now let&#x27;s move forward. That what type of items in a six liabilities as well as an equal. Okay, bye. I have used different colors for different variables. There is a specific reason behind this and 40 reasons have any just experience. Do you see the sex are the amount or we can see in farm off in form of a Benji ballistic? We can see very, very specifically a machine. Oh, are any type off any type of a set we can have for producing the benefit for the entity, like in a sex worker bee, for for the current problem for the current problem, Very specifically, I will say it. The cache includes the item s the assets include The item is cash. You can know down these items like as seen from the equation and below them. What I&#x27;m going to write. Okay, so accounts receivable. Okay. Accounts receivable deposits with banks. If you have deposited your money with the bank, then eventually at any at any time in leader future what you will You are likely to receive their dying deposit from the banks. Why? Because that&#x27;s their own money. So a sect is typically classified into two items, which is actually morning. So cash jewel own because you will have cash in your bank accounts in your drawer in your pocket. So, in terms of business, I&#x27;m going right now on accounts receivable is the Monfort you&#x27;re likely to receive okay and deposit with the bank is also typically classified as the amount which are likely to receive from the banks. Okay, so these are the most improbably event. See which memory deal right now? Okay. And Borden, Dems of liabilities. So I will make you no distinction like this. So that a week, maybe great. So make a clear distinction. Award item are comprising which element. Okay, so in gifts of liabilities, do you have short for long term debt? Like short term debt is a debt which has to be paired with dina within a year. With implements begins there specifically on more than that will be it will be classified best long term hit. Yet it has the meaning off accounts receivable that we have in case of a sex. We&#x27;re likely to receive a moan from someone, but in case of liabilities that this becomes a demon. What about the townspeople? It represents the amount, actually, which has to be beard to the supplier for which we have a really benefit. Okay. Like deposits. Okay. Off against advances we have received from the customer. Because if let&#x27;s say if if a seller of phone has received advance from a customer So there is also a liability for what? To supply the phone so that customers and what will be the amount of their pliability, the cost of the phone? Because you have received an advance from a customer stating that you that the phone will be delivered in two weeks or expert the business requirements. Okay, so that is also 11 p. So then it advance retreat, arrest. And it could be We will be mostly considering as off no capital capital greased. Okay, we will discuss it in in very, very detailed when we will face these terms. Okay. But as of now, the capital is that capital bases mostly using terms off Inquisition capital which is raised who financed the project. Okay. Expanding business or financing day to day operations, Capitalist Entertain earnings and as a part of the day, no earnings, profit and loss. Okay, profit and loss vibe, profit and loss. ASM As a matter of convention as a matter off Dale, you&#x27;re a level in the balance sheet Classifications, rules, retained earnings. Or we can say the part off equity. We&#x27;ll also include the profit generated profit or loss generated during the ear. Like you can see when we will have a business. Okay, then we will have a business Whatever the profit or loss will be generated in the business, Who will Who will be attacked, Loss or who will you no avail. The benefit of profit, Of course. The business and tip in your who started the business. So that is whether it could be is allergic to the mostly duty business businessman. Okay, so that is my bm included the profit and loss of profit and loss amount in the retainer thinks which which will be in fortunately, he could equally part. Now let&#x27;s come blow the problem. It has been seared. So let&#x27;s form over the basic accounting questions so that we can answer ever cushion. Okay. No. What has Bean stated in the problem? Like when the current month utility bill will be paired? So what? Type off for type off impact will it have on the both sides of the equation? These This is the left hand side of the question. This is the right inside of the question. Okay, so don&#x27;t confuse with this, like, both side means assets or liabilities. No, that&#x27;s not the meaning. Actually, these are like both sides of the question. Like you. We have ah, transaction that the current month utility bill is paid, so it will have impact on the two sides Like 1st 1 is this Most money&#x27;s this one. And second is this one. Okay. Okay. So now if the current month utility bill will be paid, then first of all, if we are being something, we will be releasing the gash from over the six. As we have seen in the this example. So the cash will be, you know, the cash we deducted in this case by because we are being someone. Okay. Now there is no relation to liability. Why, they&#x27;re so because we have just incurred the utility bill in the current month. So be it is doing the month. It has to be paired, but it has not been outstanding. Okay, what is the meaning of our standing that lets you suppose if you have incurred the genovian, If you have incurred any phone expenses for the gin very month and you have coming, you have come forward to February mint, but you have still who still have not paid the month of General. So that is a lie that will become a liability. But in case off the current case it will. It will not be a liberty. So where they can&#x27;t go? The effect will go to that. It could be part. And in a goody bart, it will be most specifically related to the being that buck and how beautiful park I&#x27;ve been expecting. You see, in business what we generally what we generally do, We have a motive on the profit. Okay, that&#x27;s all. If you if you&#x27;re including some expenses, you will have prepared for very, very sure as of today or any later point in time, you will have to pay expenses. If you will pay expenses, you will get your cash is abused. Okay, that&#x27;s clearly total. So first effect off the tradition has been created that on the left, inside on the insect in there set element. Okay. But it will also decrease your profit violated. So because you are, if you are including some expenses, it will obviously decrease your profit, right? If you will, if you will have select Oh, like suppose you haven&#x27;t driven your $1000 but you have not taken any expense. That&#x27;s of course. It&#x27;s like hi protected and totally hypothetical. But if you&#x27;re willing to cut expenses so it will decrease down your revenue to Okay. That is why the prophet will also decrees. Okay, who&#x27;s to reflect that? There will be double effect off the transition. Okay, so what? What is the actual answer? We have a decline on the sex side. Okay. The left hand side of the equation. Long with that, we have declined on the right hand side of the equation in the equity side, so we have dragged off a solution. But as a jingle or general rule what you will have please write it down to make sure that you will. You will get to know about this concentrated on two. Then we will have much advanced problem. Okay? Every financial transaction, we&#x27;ll always have double effect. One accounting the question. You could just write it down because it is the role we have just derived out off the current problem. Also. Now, next we will write other choice. So what is the actual choice? Both side Begley&#x27;s. Okay? My actual. Because we have just seen twice that we are getting our asses excited. Used by the amount that we repaired for the current month utility bill along with that we will have our profit reduced to the level after lingering the after regarding the expenses also. Okay, So the correct choice for the Children before is be Thank you.

Puneet Prajapati · Answer

Okay, so we are going to understand the trial balance. Okay for her by that Beeville indistinct the hallway. How weekend you hear a different version of travel buttons all together. Okay, so it is. Ah, summarised Form off on the ground. Bellen. Sears! Okay. Who the pair? Bellen ship. Okay, so, first, if I Let&#x27;s suppose all lovey every forever be everything. The technical definition, however, leaving in this day that how booties toward different version of events. Let&#x27;s suppose there are 100 thousands of transaction in a business entity. Okay? Because of business, entity has to deal with multiple times multiple supplies to run the business keeps will actually 10,000 evictions. Okay, so in accounting is employed Lettuces entity Who records the transaction? Okay, So older by that, the content it was those projections. Okay, after posting the on my back, the So what? What step? The posting give us It gives ah, high level pale off all the account balances. Okay, there s our pal. Balance gives us summarize form of competences and from travel INTs, VP, daily bed and shit. However, I&#x27;m interfering. The second possessed with the definition, like my drawing the arrow. However you can right this example. Very clear. Okay, I&#x27;m drying the arrow to make the things very, very clear. Okay, so balance sheet is the final step in patient off hundreds of statements and their trial balance is the lots last stepping stone to abandon ship. Okay, now, let&#x27;s suppose the counting Mrs 50 Transactions deck would very, very important from the business point of view. So those 52 elections were left to be recorded forward by that left, people stared, and their effect was also Lord implant balance. So? So the banshee per patient will be wrong. Okay? No. What happens? There comes the concept. A concept off. And just in 12 minutes. Well, that rescue, okay? And just simply ambulance water. What? It will have just take a lord. So the ambulance will off course have the effect off 10,000 transition. However, when we will say when we say that adjusted evidence, it will also have the Fecteau 50 transactions. Okay. Now, from these total effects, they will prepare over Maren. She? But what happens? These salvation? Well, in total, I have a single effect on a single ago. Okay, So these these people on the chin. We&#x27;ll have a symbol single effect on a single ago. Like the combined effect we can see noticing the combined effect on a single account that we know that that people less do you notice? So under Dana thinks what we have in the earnings we have our perfect our laws and nurtured during the current financial year. Retained earning balance at the beginning often engineer and any wouldn&#x27;t be through the shared orders. OK, so these 50 transaction, or we can see any number of transaction will have effect will ever direct effect on this. Okay, so now what we have what we have that the balance on the balance of retained earnings are just to trial balance and Bill in chief will be different by that. So because 52 election will have a combined effect on tenements and that is why we have different parents over Dana, Knicks, honor, justice, tell evidence in different balance sheet level. Okay, so that that matches with So they retained earnings that count, which will have different. But it&#x27;s on both the statements. Okay. And back matches with joi sey engages off, but in Kocian. Okay, So the correct choice is joi sey. Okay, that&#x27;s all for our solution. Thank you

Problem

What is the impact on the accounting equation whe…

Problem 25 Hard Difficulty

What is the impact on the accounting equation when a payment of account payable is made?
A. both sides increase
B. both sides decrease
C. only the Asset side changes
D. neither side changes

Answer

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Mitchell Franklin, Patty Graybeal, Dixon Cooper

Principles of Accounting Volume 1: Financial Accounting

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Principles of Accounting Volume 1: Financial Accounting

Mitchell Franklin, Patty Graybeal, Dixon CooperPrinciples of Accounting Volume 1: Financial Accounting

Mitchell Franklin, Patty Graybeal, Dixon Cooper

Principles of Accounting Volume 1: Financial Accounting