Presented here are nine transactions and the analysis used to account for them.
Evaluate each of the suggested accounting treatments and indicate whether it is true or false.
1. Received cash of $38,000 from the stockholders, who bought stock in the business.
Answer: Increase asset, increase stockholders’ equity. _____ True _____ False

2. Paid $450 cash to purchase supplies.
Answer: Increase asset, increase stockholders’ equity. _____ True _____ False

3. Earned service revenue on account, $500.
Answer: Increase asset, increase retained earnings. _____ True _____ False

4. Purchased office furniture on account at a cost of $850.
Answer: Increase asset, increase liability. _____ True _____ False

5. Received cash on account, $1,400.
Answer: Increase asset, decrease asset. _____ True _____ False

6. Paid cash on account, $675.
Answer: Increase asset, increase liability. _____ True _____ False

7. Sold land for $38,000 cash, which was the cost of the land.
Answer: Increase asset, decrease asset. _____ True _____ False

8. Serviced automobiles and received cash of $680.
Answer: Increase asset, increase revenue. _____ True _____ False

9. Paid monthly office rent of $1,200.
Answer: Decrease asset, increase stockholders’ equity. _____ True _____ False