For the following business transactions, identify the bookkeeping accounts affected; classify the bookkeeping accounts as Asset, Liability, Equity, Revenue, or Expense; and determine whether the effect is an increase or decrease on the bookkeeping accounts. (10 marks)

 

1. On January 5, a lodging business issues a check paying the January rent.
2. A hospitality operation uses the asset method of accounting for supplies. Supplies of $800 are purchased on open account.
3. A hospitality facility uses the perpetual inventory system. Storeroom purchases of $2 000 are made on open account.
4. A guest tab shows the following information: food at $70, beverage at $40, and sales tax at $5.50. The guest paid with a Visa credit card.
5. A business issues a check paying the currently due mortgage. The principal is $700 and the interest $800.

Answer rating: 100% (QA)

1 On January 5 a lodging business issues a check to pay the January rent Answer Rent is a nominal account Paying rent is an expense So it is an expens... View the full answer