Indicate How Each Event Affects the Financial Statements

question 82

Essay

Indicate how each event affects the financial statements. Use the following letters to record your answer in the box shown below. 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 dollar amounts.
Increase = I Decrease = D Not Affected = NA
On September 1, Year 1, Diaz Company loaned $10,000 to Ace Company. Show the effect of this transaction on Diaz's financial statements.

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Definitions:

Creative Destruction

The process through which new innovations lead to the demise of older technologies, promoting progress and economic growth.

Diffusion

The process by which an innovation is communicated through certain channels over time among the members of a social system.

R&D

Short for Research and Development, involving investigative activities a business conducts to improve existing products and procedures or to lead to the development of new products and procedures.

Invention

The creation of a new product, system, or process that has never before been made and is recognized as the product of some unique insight.