1. Aashish Company had a transaction that caused a $40,000 decrease in both assets and liabilities. This transaction could have been a(n):
A. Purchase of office equipment for $54,000, paying $14,000 cash and issuing a note payable for the balance
B. Investment of $40,000 cash in the business by the stockholders
C. Purchase of office equipment for $40,000 cash
D. Repayment of a $40,000 bank loan
2. A company received a $24,000 payment for services to be performed over the next few months. What would the effect of this transaction on the current year’s accounting equation?
A. No effect on Assets; $24,000 decrease in Liabilities; $24,000 increase in Stockholders’ Equity
B. $24,000 increase in Assets; $24,000 increase in Liabilities; No effect on Stockholders’ Equity
C. $24,000 increase in Assets; No effect on Liabilities; $24,000 increase in Stockholders’ Equity
D. No effect on Assets; $24,000 increase in Liabilities; $24,000 decrease in Stockholders’ Equity