References
Short Answer Difficulty: 3 Hard Learning Objective: 01-10 Record business events using a horizontal
financial statements model.
9.
Award: 10.00 points
10.
Award: 10.00 points
Indicate how this event affects the accounting equation. Use the following letters to record your answer in the box shown below each element. If an event
increases one account and decreases another account within the same element, record I/D. If an event has no impact on the element, record NA. You do not
need to enter amounts.
Increase = I Decrease = D Not Affected = NA
Nguyen Company borrowed $50,000 cash from Metropolitan Bank.
Balance Sheet Income Statement
Statement of Cash
Flows Assets = Liabilities +
Stockholders'
Equity Revenue − Expense = Net Income
Balance Sheet Income Statement
Statement of Ca Assets = Liabilities + Stockholders' Equity Revenue − Expense = Net Income
I I NA NA NA NA I
Borrowing cash is an asset source transaction that increases a business's assets (cash) and its liabilities (notes payable). It does not affect the income
statement, but is reported as a cash inflow from financing activities in the statement of cash flows.
References
Short Answer Difficulty: 3 Hard Learning Objective: 01-10 Record business events using a horizontal
financial statements model.
Indicate how this event affects the accounting equation. Use the following letters to record your answer in the box shown below each element. If an event
increases one account and decreases another account within the same element, record I/D. If an event has no impact on the element, record NA. You do not
need to enter amounts.
Increase = I Decrease = D Not Affected = NA
Bell Company provided consulting services for $20,000 cash.
Balance Sheet Income Statement
Statement of Cash
Flows Assets = Liabilities +
Stockholders'
Equity Revenue − Expense = Net Income
Balance Sheet Income Statement
Statement o Assets = Liabilities + Stockholders' Equity Revenue − Expense = Net Income
I NA I I NA I
This is an asset source transaction that increases the business's assets (cash). When a business provides services, it earns revenue. Revenue increases net
income, which will increase stockholders’ equity (retained earnings) at the end of the accounting period. This event is reported as a cash inflow from operating
activities in the statement of cash flows.
References
Short Answer Difficulty: 3 Hard Learning Objective: 01-10 Record business events using a horizontal
financial statements model.
11.
Award: 10.00 points
12.
Award: 10.00 points
Indicate how this event affects the accounting equation. Use the following letters to record your answer in the box shown below each element. If an event
increases one account and decreases another account within the same element, record I/D. If an event has no impact on the element, record NA. You do not
need to enter amounts.
Increase = I Decrease = D Not Affected = NA
Pierce Company paid $40,000 cash to purchase land.
Balance Sheet Income Statement
Statement of Cash
Flows Assets = Liabilities +
Stockholders'
Equity Revenue − Expense = Net Income
Balance Sheet Income Statement
Statement o Assets = Liabilities + Stockholders' Equity Revenue − Expense = Net Income
I/D NA NA NA NA NA
Purchasing land for cash is an asset exchange transaction that increases one asset (land) and decreases another asset (cash). It does not affect the income
statement. The statement of cash flows reports a cash outflow from investing activities.
References
Short Answer Difficulty: 3 Hard Learning Objective: 01-10 Record business events using a horizontal
financial statements model.
Indicate how this event affects the accounting equation. Use the following letters to record your answer in the box shown below each element. If an event
increases one account and decreases another account within the same element, record I/D. If an event has no impact on the element, record NA. You do not
need to enter amounts.
Increase = I Decrease = D Not Affected = NA
Perez Company paid $220,000 cash in salaries to its employees.