BACKGROUND Understanding accounting information goes far beyond the ability to r
ID: 2377860 • Letter: B
Question
BACKGROUND Understanding accounting information goes far beyond the ability to record correct journal entries. It is essential that preparers and users of financial information understand how transactions affect the elements of the financial statements.
REQUIRED Indicate whether the following income statement related transactions for Counting Crows, Inc. increased (I), decreased (D), or had no effect (NE) on the financial statement elements below. Each box should have an answer.
Understanding accounting information goes far beyond the ability to record correct journal entries. It is essential that preparers and users of financial information understand how transactions affect the elements of the financial statements. Indicate whether the following income statement related transactions for Counting Crows, Inc. increased (I), decreased (D), or had no effect (NE) on the financial statement elements below. Each box should have an answer.Explanation / Answer
Accrual of interest on a note payable.
Liabilities (I)
Asset & Equity (NE)
Use of prepaid insurance.
Assets (D)
Liab & Equity (NE)
Sale of goods for cash.
Asset (I)
Liab & Equity (NE)
Payment of current period utilities.
Assets (D)
Liab & Equity (NE)
Realization of previously recorded unearned revenue.
Assets, Liab & Equity (NE)
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