1. Explain the account type purpose and financial statement where Liability first appears.
2. Identify the normal balance of the account and the side on which it increases and decreases for Liability.
3. Develop two transactions for Liability, one that results in an increase to the account group and one that results in a decrease to the account. For each transaction (increase/decrease) prepare the following information...
a. Written description of the business transaction
b. Explanation of an accounting principle or assumption that applies to the transaction.
c. Journal entry of the transaction that involves at least two accounts, correctly formatted with the date, account name, debit or credit, and explanation line.
d. Demonstrate the accounting equation remains in balance after the transaction.
e. Show the effect on the financial statements first affected by the transaction.
All of these questions should be targeted towards the Liability account in Accounting/Accounting Equation.