S.No Particulars Total Current Assets Current Ratio Effect on Net Income 1 Cash is acquired through the issuance of additional common stock. + + 0 2 Merchandise is sold for cash. + + + 3 Federal income tax due for the previous year is paid. - + 0 4 A fixed asset is sold for less than book value. + + - 5 A fixed asset is sold for more than book value. + + + 6 Merchandise is sold on credit + + + 7 Payment is made to trade creditors for previous purchases. - + 0 8 A cash dividend is declared and paid. - - 0 9 Cash is obtained through short-term bank loans. + - 0 10 Short-term notes receivable are sold at a discount. - - - 11 Marketable securities are sold below cost. - - - 12 Advances are made to employees. 0 0 0 13 Current operating expenses are paid. - - - 14 Short-term promissory notes are issued to trade creditors in exchange for past due accounts payable. 0 0 0 15 10-year notes are issued to pay off accounts payable. 0 + 0 16 A fully depreciated asset is retired. 0 0 0 17 Accounts receivable are collected. 0 0 0 18 Equipment is purchased with short-term notes. 0 - 0 19 Merchandise is purchased on credit. + - 0 20 The estimated taxes payable are increased. 0 - - Can you give an explanation of each effect on transaction. Thank you in advance

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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S.No	Particulars	Total Current Assets	Current Ratio	Effect on Net Income
1	Cash is acquired through the issuance of additional common stock.	+	+	0
2	Merchandise is sold for cash.	+	+	+
3	Federal income tax due for the previous year is paid.	-	+	0
4	A fixed asset is sold for less than book value.	+	+	-
5	A fixed asset is sold for more than book value.	+	+	+
6	Merchandise is sold on credit	+	+	+
7	Payment is made to trade creditors for previous purchases.	-	+	0
8	A cash dividend is declared and paid.	-	-	0
9	Cash is obtained through short-term bank loans.	+	-	0
10	Short-term notes receivable are sold at a discount.	-	-	-
11	Marketable securities are sold below cost.	-	-	-
12	Advances are made to employees.	0	0	0
13	Current operating expenses are paid.	-	-	-
14	Short-term promissory notes are issued to trade creditors in exchange for past due accounts payable.	0	0	0
15	10-year notes are issued to pay off accounts payable.	0	+	0
16	A fully depreciated asset is retired.	0	0	0
17	Accounts receivable are collected.	0	0	0
18	Equipment is purchased with short-term notes.	0	-	0
19	Merchandise is purchased on credit.	+	-	0
20	The estimated taxes payable are increased.	0	-	-

Can you give an explanation of each effect on transaction. Thank you in advance

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