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Homework answers / question archive / The business hires an office manager at $700 per week, to start work in one month's time
The business hires an office manager at $700 per week, to start work in one month's time.
The immediate effect on the accounting equation is to:
a) increase equity by $700 and decrease the asset cash by $700
b) decrease the asset cash by $700 and decrease equity by $700
c) have no effect as this is not a business transaction
d) increase wages by $700 and decrease equity by $700
Answer: c) have no effect as this is not a business transaction
The transaction stated has no effect on the accounting equation as this is not a business transaction that requires immediate recording of journal entries. Hiring an office manager who will only start work in one month's time has no effect on any financial statement account. No payments has been made, and no salary has been earned yet by the employee, thus no expense was incurred by the business which in effect will have no impact on the accounting equation.
