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Respond to the following questions with your thoughts, ideas, and comments.
Describe and analyze the effects of business transactions (both in terms of increases and decreases, and debits and credits) on the basic accounting elements: assets, liabilities, owners' equity, revenues, and expenses. Prepare a set of financial statements.
The general manager of a business encounters many different types of business transactions. For each of the following, provide an example of a transaction that would describe the effect on the accounting equation. Each situation is independent of the other situations.
1. The transaction would increase an asset account and increase a liability account.
2. The transaction would decrease an asset account and decrease the owner's equity account.
3. The transaction would increase an asset account and increase the owner's equity account.
4. The transaction would decrease an asset account and decrease a liability account.
5. The transaction would increase one asset account and decrease another asset account.
6. The transaction would decrease one liability account and increase another liability account.