Indicate How Each Event Affects the Elements of Financial Statements

question 61

Essay

Indicate how each event affects the elements of financial statements.Use the following letters to record your answer in the box shown below each element.Use only one letter for each element.You do not need to enter amounts.

-On January 1,2016,Eagle Co.issued $100,000 of bonds payable at the face value.When the bonds matured on December 31,2021,Eagle used cash to repay the bond principal and the interest for one year,which had not been previously accrued.Indicate the effects of the 12/31/21 payment.

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Definitions:

Rising Prices

An economic condition characterized by a general increase in consumer prices or the cost of living, often referred to as inflation.

Conservatism

An accounting principle that requires potential expenses and liabilities to be recognized immediately, while revenues are only recognized when they are assured.

Accounting Principle

A general rule or guideline that guides accounting practices, ensuring consistency, reliability, and transparency in financial reporting.

Cost Or Market

An accounting principle that states inventory should be recorded at either its historical cost or market value, whichever is lower.