Mr - Mr.Greenuses$5,000ofthecompany' $15,000,$10,000ineighteen months.(cash)by$5,000, asset(vehicl

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Mr. Green uses $5,000 of the company's cash to place a down-payment on a used truck that costs  $15,000, and he signs a note payable that requires him to pay the remaining $10,000 in eighteen  months. This transaction decreases one type of asset (cash) by $5,000, increases another type of  asset (vehicles) by $15,000, and increases a liability (notes payable) by $10,000. The accounting  equation remains in balance, and Mr. Green now has two types of assets ($10,000 in cash and a  vehicle worth $15,000), a liability (a $10,000 note payable), and owner's equity of $15,000. Given the large number of transactions that companies usually have, accountants need a more  sophisticated system for recording transactions than the one shown on the previous page.  Accountants use the double-entry bookkeeping system to keep the accounting equation in balance  and to double-check the numerical accuracy of transaction entries. Under this system, each 
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This note was uploaded on 11/14/2011 for the course ACCT 1310 taught by Professor Staff during the Fall '10 term at Texas State.

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Mr - Mr.Greenuses$5,000ofthecompany' $15,000,$10,000ineighteen months.(cash)by$5,000, asset(vehicl

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