Exercise 1-12 Identifying effects of transactions on the accounting equation LO P1 Select a transaction that effects the accounting equation as follows: Effects a. The company purchases equipment on credit b. The company receives cash from an accounts receivable. c. The company purchases equipment for cash. d. The company pays cash dividends to shareholders. The owner invests cash in the business in exchange for its common stock. t. The company made a cash withdrawal (dividend) to the owner. Transaction Increases an asset and increases a liability Decreases an asset and decreases a liability Increases an asset and decreases an asset. Decreases an asset and decreases equity Increases an asset and increases equity. Decreases an asset and decreases equity