Consider the Following List of Transactions

question 8

Essay

Consider the following list of transactions:
1)Provide services to customers on account2)Purchase land by paying cash.3)Purchase a fire insurance policy that will provide coverage for a two-year period4)Acquire cash by issuing common stock.5)Recognize expense for the amount of supplies that had been used during the period6)Receive payment from a customer for services that will be provided over the next six monthsRequired:a)In the table below, indicate the accounts that would be debited and credited for each of the transactions listed above.
b)Indicate how each transaction affects the financial statements using a "+" to signify an increase, "−" to signify a decrease, or "NA" to signify not affected under each component in the horizontal financial statements model shown below. In the last column, use the letters "OA" for operating activities, "IA" for investing activities, and "FA" for financing activities, or "NA" if the statement of cash flows is not affected.

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Definitions:

Operating Activities

Transactions and events that relate to the core business functions, such as receipts from sales of goods and services, payments to suppliers, and salaries to employees.

Depreciable Asset

A type of asset that loses value over time due to wear and tear, decay, or obsolescence, which can be accounted for through depreciation.

Indirect Method

A method of preparing the cash flow statement in which net income is adjusted for non-cash transactions and changes in working capital.

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenue.