State the effect on the Accounting Equation for the 2800 wages paid for the month of June for Kerrie's Gardening.
Explain the effect of the transaction on the balance sheet if Vincent the owner purchased 60 dollars for dinner in Mc Donald's.
Explain one way stock cards could be used to reduce stock loss.
Please help :3
a state the effect on the ACC eqn means to do the following --> EXPLICITLY state the effect on Assets, Liabilities and OE
so
Assets--> Bank will decrease by 2800 ( since you paid them you loose 2800 in money)
Liabilities --> No effect ( important to mention there is no effect )
Owner's Equity --> Profit decrease by 2800 as your wages expenses increased by 2800.
For your second equation, you don't need to record anything UNLESS he used 60 dollars from the firm but that doesn't seem to be the case. This is because of the entity principle which states that the owner and the firm are considered two separate entities.
For the stock card questions i have two potential answers:
Stock cards can be used as a checking mechanism and can be compared to your physical stocktake to allow for any stock losses or gains to be picked up, this allows for the firm to pick up on stock losses and recognize the issue in the first place. They can then take direct action to help combat this and reduce the frequency of stock losses.
Or
Stock cards allow the firm to have an accurate value of stock on hand whilst accounting for the movement of stock in and out of the firm. This allows the firm to reduce the chance of a stock loss occurring as it reduces the chance of the stocktake value being different from the value in the stockcard ( assuming we use a different method of accounting for stock ) :/ idk tbh bit of a stretch