Question

Applying Financial Statement Linkages to Understand Transactions Consider the effects of the independent transactions, a through h, on a company's balance sheet, income statement, and statement of cash flows. Complete the table below to explain the effects and financial statement linkages. Refer to Exhibit 2.10 as a guide for the linkages. a. Wages are earned by employees but not yet paid. b. Inventory is purchased on credit. c. Inventory purchased in transactions b is sold on credit (and for more than its cost). d. Collected cash from transaction c. e. Equipment is acquired for cash. f. Paid cash for inventory purchased in transaction b. g. Paid cash toward a note ayable that came due. h. Paid cash for interest on borrowings. To indicate the account increases (+), enter "1" in the answer box. To indicate the account decreases (-), enter "2" in the answer box. If the account is not impacted by the transaction, leave the answer box blank.

Answer 1

srintean thee 44 olecreau he This transaction's expersiet. Ate No effece CNot a buiny cash * elecreau efpes shown in the total liabitine Financing Calh Flow. banaction. It Increas the Pris bensaction's effect Shoun in प cosh ļ decreou It olecreau the कललक् the toted Licabiütie Financing eeush Flow

Sevial No Balance Sheet Increau in totel Statement of_cash Flow 4ncome Stetement No effect (Not paid) tincuave the liabilitiy eppenses. No effecl It incuau the Incriau in to fal (caudie purchae] liabilities expenies It inciau Hha NO effeet (oreadis Sale) Increau in erutained eenings. revenue No effect ols I4 inenoves the I+ increaveis in Operating Ceuh plow (Sale alreooly veecamied) Cash 14 incuon the NO effect KExpenses in teim of cofital expenalitune) It decnau the Cosh 8 Inereoe the Inveiting Cash Flow Non-Cash anett No effect (transaction operating Cashflow. aleady reeggnisee) This transacfion's 4+ dicreau the ffect shaon in Cash and dlecreau the liabilitiey.