Indicate How Each Event Affects the Horizontal Financial Statements Model

question 49

Essay

Indicate how each event affects the horizontal financial statements model. Use the following letters to record your answer in the box shown below each element. If an event increases one account and decreases another account equally within the same element, record I/D. If an event has no impact on the element, record NA. You do not need to enter amounts.
Increase = I Decrease = D Not Affected = NA
Stan's Surf Shack purchased 5 surfboards for $200 each. Later it purchased 2 more surfboards for $250 each. Stan's uses the perpetual inventory system. Assume that 6 surfboards were sold during the period for $350 cash each.
How would the sale of the six surfboards affect the financial statements if Stan's Surf Shack uses the LIFO inventory cost flow method? Assume the surfboards were sold to customers for more than their original cost.

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Definitions:

Trade Name

A commercial name used by a company or business for trading purposes, under which it conducts business or offers services.

Sole Proprietor

An individual who owns and operates a business alone, without forming a corporation or partnership.

Fictitious Business Names

Aliases under which individuals or businesses operate that are different from their legal, registered names, often registered with local or state governments.

Professionals

Individuals who possess specialized knowledge or skills in a particular field, often requiring certification or licensing.