This transaction would be recorded as follows:

1. Cash Flow: The business would record an inflow of cash as the friend has contributed $40000 to the business. This would be recorded under the financing activities in the cash flow statement as it involves owners' equity.

2. Equity: The equity of the business would increase as the friend has become a part owner. This would be recorded in the equity section of the balance sheet. The specific account would be "Common Stock" or "Owners' Equity" depending on the structure of the business.

3. Journal Entry: The business would make a journal entry to record this transaction. The entry would be a debit to the Cash account (increasing its balance) and a credit to the Common Stock or Owners' Equity account (increasing its balance).

So, the accounts involved would be the Cash account and the Common Stock or Owners' Equity account. The flows involved would be the cash inflow and the increase in equity.

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This transaction would be recorded as follows:

1. Cash Flow: The business would record an inflow of cash as the friend has contributed $40000 to the business. This would be recorded under the financing activities in the cash flow statement as it involves owners' equity.

2. Equity: The equity of the business would increase as the friend has become a part owner. This would be recorded in the equity section of the balance sheet. The specific account would be "Common Stock" or "Owners' Equity" depending on the structure of the business.

3. Journal Entry: The business would make a journal entry to record this transaction. The entry would be a debit to the Cash account (increasing its balance) and a credit to the Common Stock or Owners' Equity account (increasing its balance).

So, the accounts involved would be the Cash account and the Common Stock or Owners' Equity account. The flows involved would be the cash inflow and the increase in equity.

Knowee AI · Accepted Answer

This transaction would be recorded as follows:

1. Cash Flow: The business would record an inflow of cash as the friend has contributed $40000 to the business. This would be recorded under the financing activities in the cash flow statement as it involves owners' equity.

2. Equity: The equity of the business would increase as the friend has become a part owner. This would be recorded in the equity section of the balance sheet. The specific account would be "Common Stock" or "Owners' Equity" depending on the structure of the business.

3. Journal Entry: The business would make a journal entry to record this transaction. The entry would be a debit to the Cash account (increasing its balance) and a credit to the Common Stock or Owners' Equity account (increasing its balance).

So, the accounts involved would be the Cash account and the Common Stock or Owners' Equity account. The flows involved would be the cash inflow and the increase in equity.

A friend of the owners contributes $40000 to become a part owner. Select the flows and accounts that the business would use to record this transaction.

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