Determine the Effect of the Following Transactions on the Identified

question 33

Essay

Determine the effect of the following transactions on the identified financial statement components and ratios.Code your answers as follows:
A: If the transaction results in an increase in the financial statement component or ratio.
B: If the transaction results in a decrease in the financial statement component or ratio.
C: If the transaction does not affect the financial statement component or ratio.
Transaction 1: A company paid for research and development costs incurred to develop a patent.
Net income _____
Property,plant,and equipment _____
Stockholders' equity _____
Net profit margin ratio _____
Transaction 2: Inventory was purchased on account.
Net income _____
Current assets _____
Current liabilities _____
Return on assets ratio _____

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Definitions:

Trading Purposes

Activities conducted with the objective of profiting from short-term fluctuations in market prices.

Investing Activities

Transactions and events related to the acquisition and disposal of long-term assets and other investments, reflected in a company's cash flow statement.

Purchase And Sale

Purchase and sale refer to the process of acquiring goods or services (purchase) and then offering them for consumption or usage by others (sale), serving as the fundamental activity of any commercial business.

Financing Activities

Transactions and events where a company either raises funds through borrowing or repaying debt, or issuing and repurchasing its own shares, as seen in the cash flow statement.