On November 1, Year 1, Shelter Company loaned $4,000 cash to Cove Company. The one-year note carried a 5% rate of interest. Which of the following shows how the loan will affect Shelter’s financial statements on November 1, Year 1?### Balance Sheet| Assets | = Liabilities + Stockholders’ Equity | Income Statement | Statement of Cash Flows ||-------------------------|--------------------------------------------|------------------|--------------------------|| Cash + Receivable | = Net Accounts Payable + Common Stock + Retained Earnings | Revenue - Expense = Net Income | Cash Flows || A. -4,000, 4,000, NA, NA, NA, NA, NA, NA, -4,000 IA || B. -4,000, 4,000, NA, NA, NA, NA, NA, NA, -4,000 OA || C. -4,000, NA, 4,000, NA, NA, NA, NA, 4,000 IA || D. -4,000, NA, -4,000, NA, NA, NA, NA, -4,000 OA |**Multiple Choice:**- Option A- Option C- Option D- Option B**Explanation of Options:**- **Option A:** Reflects a decrease in cash ($4,000) and an increase in receivables ($4,000). It affects the investing activities section of the cash flow statement.- **Option B:** Similar to Option A but reflects the cash flow as an operating activity.- **Option C:** Reflects a decrease in cash ($4,000) and adjusts for liabilities resulting in a $4,000 investing activity.- **Option D:** Reflects a decrease in both cash and liabilities with the cash flow seen as an operating activity.NA (Not Applicable) indicates areas where there is no impact by this transaction.

The loans can be considered as the asset or liability for the firm as the case may be. When the loan…

On November 1, Year 1 Shelter Company loaned $4,000 cash to Cove Company. The one-year note carried a 5% rate of interest. Which of the following shows how the loan will affect Shelter's financial statements on November 1, Year 1? A. B. C. D. Cash -4,000 -4,000 -4,000 -4,000 Multiple Choice O Assets O O Net + Receivable = Payable + 4,000 ΝΑ 4,000 ΝΑ Option A Option C Option D Option B Balance Sheet =Liabilities + Stockholders' Equity Accounts Common Retained Stock + Earnings ΝΑ ΝΑ ΝΑ ΝΑ ΝΑ 4,000 -4,000 ΝΑ ΝΑ ΝΑ ΝΑ ΝΑ Revenue ΝΑ ΝΑ ΝΑ ΝΑ Income Statement Expense = Net Income ΝΑ ΝΑ ΝΑ ΝΑ NA ΝΑ ΝΑ ΝΑ Statement of Cash Flows -4,000 IA -4,000 OA 4,000 IA -4,000 OA

On November 1, Year 1 Shelter Company loaned $4,000 cash to Cove Company. The one-year note carried a 5% rate of interest. Which of the following shows how the loan will affect Shelter's financial statements on November 1, Year 1? A. B. C. D. Cash -4,000 -4,000 -4,000 -4,000 Multiple Choice O Assets O O Net + Receivable = Payable + 4,000 ΝΑ 4,000 ΝΑ Option A Option C Option D Option B Balance Sheet =Liabilities + Stockholders' Equity Accounts Common Retained Stock + Earnings ΝΑ ΝΑ ΝΑ ΝΑ ΝΑ 4,000 -4,000 ΝΑ ΝΑ ΝΑ ΝΑ ΝΑ Revenue ΝΑ ΝΑ ΝΑ ΝΑ Income Statement Expense = Net Income ΝΑ ΝΑ ΝΑ ΝΑ NA ΝΑ ΝΑ ΝΑ Statement of Cash Flows -4,000 IA -4,000 OA 4,000 IA -4,000 OA

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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