Question

Which one of the following transactions is depicted by the horizontal financial statement model below? Balance Sheet Income Statement CashFlows Note Common Retained Net Cash Land Payable Stock Earnings Revenue Expense com 1/D Type " Income IOA Sell Land Incur Costs Associated with Generating Revenue Purchase Land Provide Services to Customers

Answer 1

particulars

Explanation

Sell land

For this transaction , cash account will be debited & asstes will get reduced in the balance sheet (at the assets side)

Cash flow will also get reflected if the transaction is done in cash

Incur cost associated

This transaction is also called as advertising/marketing expenses

with generating revenue

cost associated for generating revenue will be shown as expenses incurred in income statement at debit side assets side

also if paid in cash then will get reduced from cash A/c on the balance sheet

Cash flow will also get reflected as the cost is been incurred which results in outflow of cash

Purchase Land

fixed Assets will get increased at the assets side of the Balance sheet & simultaneously cash will get reduced at the assets side of balance sheet (if paid in cash )

or else if not paid in cash then creditor will be created which will be shown at the current liabilities under liabilities side of balance sheet.

cash flow will also get reflected only when transaction is done in cash

provide service to customers

there might be 2 situation in this case , firstly, if service is provided to customer to generate revenue , secondly, warranty service provided on service/products

Under the 1st situation , income statement will get effected as revenuce will be increased , also cash flow will be effected as service is provided against cash

Under the 2nd situation , income statement will be effected at expenditure side