Describe a transaction that would:   Increase both an asset and a liability.  Increase one asset and decrease another asset.  Decrease both a liability and an asset. Increase both an asset and retained earnings. Decrease both an asset and retained earnings.

When an expenditure  is made and it is treated as an expense but should have been capitalized, the resulting impact in the year of the expenditure would be:   A. Assets would be overstated, net income would be understated.   B. Both the assets and net income would not be affected.   C. Assets would be understated, net income would be understated.   D. Assets would be understated, net income would be overstated.

For each of the following cate ories, state con:Cisely a transaction that will have the required ef. fect on the elements of the acc ounting iquation.' EXERCISE 2.7 Effects of Business Transactions a. Increase an asset and inerease a liability. b. Decrease an asset and decrease a liabilitv. c. Increase one asset and decrease another asset. d. Increase an asset and increase owner's eyuit e. Increase one asset, decrease another asset, and increase a liability. LO 3

Explain the accounting and amortization for unexpected gains and losses.