Financial Statement Effects: For each of the accounting events shown below, indi

Question

Financial Statement Effects: For each of the accounting events shown below, indicate in the space provided the appropriate n where is appears, but what it would affect!). umber of the financial statement(s) the event would affect (not 1. Income Statement 2. Statement of Owner's Equity 3. Balance Sheet 4. Statement of Cash Flows a. $500 worth of services are performed for and billed on account b. The electric bill for $250 is received and paid. c. A machine worth $5,000 is acquired on open account. d. An advertisement worth $50 is run in the local newspaper. We are billed for the ad, due next month. e. The owners invested $5,000 cash in the business. f. Employees work earning $6,000, but are not yet paid. g. Paid $600 cash for supplies. h. Paid $500 cash to supplier to settle Accounts Payable. i. Received $300 cash on account from a customer j. Property taxes of $500 are due but will not be paid until the end of the month. k. Supplies worth $400 are used.

Explanation / Answer

a) Income Statement

Due to increase in Sales or Revenue

B) Income Statement and Cash flow Statement

Due to increase in Expenses and Outflow of Cash

C) Balance Sheet: Due to Increase in Fixed Asset and Reduction of Bank and

Cash flow Statement: Due to Investing Activities

D) Income Statement: Due to Increase in Expense

E) Statement of Owner Equity: Due to increase in Equity and

Cash flow Statement : Financial Activities

F) Income Statement : Due to Increase in Expenses and

Balance Sheet: Due to increase in Current Liabilities in the form of Outstanding Salaries of 6000

G) Cash flow Statement : Due to Outflow of Cash for operating Activities

H) Balance Sheet : Due to Reduction of Current Liabilities and Bank by 500 and

Cash Flow Statement : Operating Activities

I) Cash Flow Statement ; Inflow of Cash

J) Balance Sheet: Increase in Current Liabilities

K) Income Statement : Increase in Expenditure

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