Question

Consider the following typical accounts and statement items and indicate on which statement(s)—income statement, statement of financial position, statement of changes in equity, and/or statement of cash flows—you would find each of the accounts or items.

1.		Sales
2.		Cash
3.		Cash provided by operating activities
4.		Service revenue
5.		Common shares
6.		Dividends declared
7.		Net income
8.		Accounts receivable
9.		Inventory
10.		Income tax expense
11.		Interest expense
12.		Cash used by investing activities
13.		Equipment
14.		Retained earnings
15.		Bank loan payable

Answer 1

		Income Statement	Statement of Financial Position	Statement of Changes in Equity	Statement of Cash Flows
1	Sales	X
2	Cash		X		X
3	Cash provided by operating activities				X
4	Service revenue	X
5	Common shares		X	X
6	Dividends declared			X
7	Net income*	X		X	X
8	Accounts receivable		X
9	Inventory		X
10	Income tax expense	X
11	Interest expense	X
12	Cash used by investing activities				X
13	Equipment		X
14	Retained earnings		X	X
15	Bank loan payable		X

*Net income would appear in the statement of cash flows prepared under the indirect method but not under the direct method.