Transactions that affect earnings do not necessarily affect cash. Identify the effect, if any, that each of the following transactions would have upon cash and net income. The first transaction has been completed as an example. Cash Net Income (a) Purchased $100 of supplies for cash. − $100 $ 0 (b) Received $700 from customers in payment of their accounts. (c) Made sales of $1,200, all on account. (d) Recorded an adjustment to record use of $20 of the above supplies. (e) Purchased equipment for cash, $2,500. (f) Recorded depreciation of building for period used, $600.
Transactions that affect earnings do not necessarily affect cash. Identify the effect, if any, that each of the following transactions would have upon cash and net income. The first transaction has been completed as an example. Cash Net Income (a) Purchased $100 of supplies for cash. − $100 $ 0 (b) Received $700 from customers in payment of their accounts. (c) Made sales of $1,200, all on account. (d) Recorded an adjustment to record use of $20 of the above supplies. (e) Purchased equipment for cash, $2,500. (f) Recorded depreciation of building for period used, $600.
Chapter4: The Adjustment Process
Section: Chapter Questions
Problem 1EA: Identify whether each of the following transactions, which are related to revenue recognition, are...
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1 Transactions that affect earnings do not necessarily affect cash. Identify the effect, if any, that each of the following transactions would have upon cash and net income. The first transaction has been completed as an example.
|
|
Cash |
Net Income |
|
|
(a) |
Purchased $100 of supplies for cash. |
− $100 |
$ 0 |
|
(b) |
Received $700 from customers in payment of their accounts. |
|
|
|
(c) |
Made sales of $1,200, all on account. |
|
|
|
(d) |
Recorded an adjustment to record use of $20 of the above supplies. |
|
|
|
(e) |
Purchased equipment for cash, $2,500. |
|
|
|
(f) |
Recorded depreciation of building for period used, $600. |
|
|
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