ACC 290 Chapter 2 Test Q-5

Indicate whether each transaction will increase, decrease or have no change to the cash balance and owner's equity.

Transaction Cash Balance Owner's Equity

Pay miscellaneous expenses 

1) Pay interest on a bank loan 

2) Recognize one month of prepaid insurance 

3) Receive cash from sales

4) Pay cash to purchase property, plant & equipment 

5) Pay cash for maintenance expense 

6) Prepay insurance for the following year 

7) Obtain a loan from the bank Increase 

8) Pay cash to reduce principal portion of a bank loan