Lesson 2
Economic Transactions and Accounting Equation
Exercises
1,Lion Company had a net cash inflow of $80,000 from operating activities,It spent $40,000 on investing activities,Lion Company received $50,000 in cash from issuing stock,Calculate the net increase or decrease in cash.
2,Identify the effects of each transaction on total assets,total liabilities,and total stockholders’ equity,If there is an effect on stockholders’ equity,indicate whether it is contributed capital or retained earnings.
Transaction
Assets
Liabilities
Stockholders’ Equity
Contributed Capital
Retained Earnings
a,Received cash and issued common stock.
b,Purchased inventory on credit.
c,Purchased supplies for cash.
d,Sold inventory to customers on credit.
e,Paid rent
3,Analyze each of the following cash transactions,Identify the effects on assets,liabilities,owners’ equity,revenues,or expenses for each of the following transactions.
Earned $15,000 in sales revenues.
Paid $2,500 in advertising expense.
Paid $1,500 in cash dividends to shareholders.
A shareholder invested another $8,000 in the business.
Paid $11,800 for new inventory.
Paid off an account payable of $950.
Item
Assets
Liabilities
Owners’ Equity
Revenues
Expenses
Ex,a.
b.
c.
d.
e,
f.
4,Visit the web site of Nortel Networks Investors Corner,Track Nortel's stock price over since the start of 1999,
1) What has happened? When did the stock peak?
Review the latest annual report of Nortel Networks,
2) What insight does the report provide regarding the stock price fall?
3) What does management indicate as the future of Nortel?
Economic Transactions and Accounting Equation
Exercises
1,Lion Company had a net cash inflow of $80,000 from operating activities,It spent $40,000 on investing activities,Lion Company received $50,000 in cash from issuing stock,Calculate the net increase or decrease in cash.
2,Identify the effects of each transaction on total assets,total liabilities,and total stockholders’ equity,If there is an effect on stockholders’ equity,indicate whether it is contributed capital or retained earnings.
Transaction
Assets
Liabilities
Stockholders’ Equity
Contributed Capital
Retained Earnings
a,Received cash and issued common stock.
b,Purchased inventory on credit.
c,Purchased supplies for cash.
d,Sold inventory to customers on credit.
e,Paid rent
3,Analyze each of the following cash transactions,Identify the effects on assets,liabilities,owners’ equity,revenues,or expenses for each of the following transactions.
Earned $15,000 in sales revenues.
Paid $2,500 in advertising expense.
Paid $1,500 in cash dividends to shareholders.
A shareholder invested another $8,000 in the business.
Paid $11,800 for new inventory.
Paid off an account payable of $950.
Item
Assets
Liabilities
Owners’ Equity
Revenues
Expenses
Ex,a.
b.
c.
d.
e,
f.
4,Visit the web site of Nortel Networks Investors Corner,Track Nortel's stock price over since the start of 1999,
1) What has happened? When did the stock peak?
Review the latest annual report of Nortel Networks,
2) What insight does the report provide regarding the stock price fall?
3) What does management indicate as the future of Nortel?
