2.If the liabilities of Hannah Company increased by 10,000 while its equity remained constant, which of the following transaction could correspondingly occur?
a.Incurrence of bank loan of 10,000
b.Investment of additional capital of 10,000 c.Payment of taxes of 10,000
d.Withdrawal of capital of 10,000
1.If the assets of Hannah company decreased by 10,000 while its equity remained constant, which of the following transaction could correspondingly occur?
a.Withdrawal of capital of 10,000
b.Payment of bank loan of 10,000
c.Decrease in bank deposit of 10,000
d.Purchase of inventory on credit worth 10,000
Answers & Comments
1. If the assets of Hannah Company decreased by 10,000 while its equity remained constant, the corresponding transaction could be c) Decrease in bank deposit of 10,000. A decrease in assets, such as a reduction in bank deposits, would lead to a decrease in the company's total assets without affecting equity.