Concept explainers
(a)
Analysis of transactions
A transaction can be defined as any economic activity pertinent to a business organization. It refers to any business event that affects the assets, liabilities, and
- A transaction that increases the total assets also increases the total liabilities or owner’s equity.
- A transaction that decreases the total assets also decreases the total liabilities or owner’s equity.
- Some transactions might increase one account and decrease another on the same side of the equations, which means one asset increases while another decreases.
All transactions affect the
To prepare: The statement showing analysis of transactions.
(b)
Income Statement:
This is a financial statement that shows the net income earned or net loss suffered by a company through reporting all the revenues earned and expenses incurred by the company over a specific period of time. Income statement is also known as operations statement, earnings statement, revenue statement, or
The net income or net loss for the month of May
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Financial Accounting
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