For each transaction numbered below, identify its effect on the accounting equation by selecting from a through h below.You may use each letter more than once or not at all.
-Secured a large contract with Allegheny Company to provide computer services during the forthcoming year
A) + A and + L
B) + A and + SE (Contributed Capital)
C) + A and + SE (Retained Earnings)
D) -A and - L
E) -A and - SE (Contributed Capital)
F) - A and - SE (Retained Earnings)
G) + A and - A
H) Not communicated by the formal accounting system

Question

Quizplus · Accepted Answer

Securing a contract is a significant business development, but it does not directly affect the accounting equation (Assets = Liabilities + Shareholder's Equity) until the actual economic events (such as rendering services or receiving payments) occur.

For Each Transaction Numbered Below, Identify Its Effect on the Accounting