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. CashNet 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.

Transaction: The economic event which brings about any changes in the financial items of a business…

Answered: Transactions that affect earnings do…

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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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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