### Accounting Transaction Analysis**Transaction:**A transaction has been recorded in the T-accounts of Horowitz Corporation as follows:- **Cash T-account:** - Debit: $25,000 - **Common Stock T-account:** - Credit: $25,000**Question:**Which of the following reflects how this event affects the company's financial statements?**Options:**| | Balance Sheet | Income Statement ||-------|---------------|-------------------------------------|| | Assets | = | Liabilities | + | Stockholders' Equity | Revenue | - | Expense | = | Net Income | Statement of Cash Flows || A. | + | + | N/A | | N/A | N/A | - | N/A | | N/A | +FA || B. | + | N/A | + | | N/A | N/A | - | N/A | | N/A | +FA || C. | – | N/A | – | | N/A | – | - | N/A | | – | +OA || D. | – | – | N/A | | N/A | + | - | – | | – | –IA |**Legend:**- + indicates an increase- – indicates a decrease- N/A indicates no effect- FA refers to Financing Activity- OA refers to Operating Activity- IA refers to Investing Activity**Multiple Choice:**- Option D- Option A- Option C- Option BInterpret these options to understand how the specific transaction impacts the various components of the financial statements of Horowitz Corporation.

Ans. Whenever stocks are issued, cash is received and stock is subscribed. Stock belongs to equity fund of a company. Whenever stock is issued cash is received and equity is increased. Cash is received hence asset is increased and equity is increased. This transaction results in increase in financial asset. Hence, option B is correct.

Business

Accounting

A transaction has been recorded in the T-accounts of Horowitz Corporation as follows: Debit A. B. C. D. 25,000 Multiple Choice O Cash O O Which of the following reflects how this event affects the company's financial statements? Balance Sheet Assets = Liabilities + + + + N/A N/A O Credit Option D Option A Option C Common Stock Option B Debit Credit 25,000 N/A Stockholders' Equity N/A + Revenue N/A N/A - N/A Income Statement - Expense = Net Income Statement of Cash Flows N/A +FA N/A +FA N/A + N/A N/A +0A -IA

A transaction has been recorded in the T-accounts of Horowitz Corporation as follows: Debit A. B. C. D. 25,000 Multiple Choice O Cash O O Which of the following reflects how this event affects the company's financial statements? Balance Sheet Assets = Liabilities + + + + N/A N/A O Credit Option D Option A Option C Common Stock Option B Debit Credit 25,000 N/A Stockholders' Equity N/A + Revenue N/A N/A - N/A Income Statement - Expense = Net Income Statement of Cash Flows N/A +FA N/A +FA N/A + N/A N/A +0A -IA

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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