Fiance 1 Consider the Current Asset accounts (Cash, Accounts Receivable and Inve

Question

Fiance 1

Consider the Current Asset accounts (Cash, Accounts Receivable and Inventory) individually and as a group. What impact will the following transactions have on each account and current assets in total (Increase, Decrease No Change(NC) )? (Hint: Each transaction has two sides that are equal in amount but opposite in sign. Consider whether the sides offset within current assets or one side is recorded somewhere else.) The purchase of a fixed asset for cash The purchase of a fixed asset on credits The purchase of inventory for cash The purchase of inventory on credit Customer payment of an account receivable Writing off a customer's bad debt (assume the allowance process is in place) The sale of a fixed asset for cash The sale of inventory (at a profit) for cash The sale of inventory' (at a loss) for cash The sale of inventory (at a profit) on credit

Explanation / Answer

Cash Accounts receivable Inventory Total current assets a Decrease No change No change Decraese b No change No change No change No change c Decrease No change Increase No change d No change No change Increase Increase e Increase Decrease No change No change f No change Decraese No change Decrease g Increase No change No change Increase h Increase No change Decrease Increase i Increase No change Decrease Decrease j No change Increase Decrease Increase

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