Below Are Listed Several Transactions That a Business May Enter

question 5

Essay

Below are listed several transactions that a business may enter into.
1.Provide services to customers on account
2.Purchase land by paying cash
3.Purchase a fire insurance policy that will provide coverage for a two-year period
4.Acquire cash by issuing common stock
5.Recognize expense for amount of office supplies that had been used during the period
6.Receive payment from a customer for services that will be provided over the next six months
Required:
a)In the table below,indicate the accounts that would be debited and credited for each of the preceding transactions.
b)Show how each transaction affects the financial statements by placing a + for increase,- for decrease,and NA for not affected under each component in the horizontal financial statements model shown below.In the Cash Flow column,use the letters OA for operating activities,IA for investing activities,and FA for financing activities.Insert NA if cash flow is not affected.

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Definitions:

Sales Increase

A rise in the amount of products or services sold by a company over a specific period, typically signifying growth in business operations.

Operating Cash Flow

A financial metric that indicates the amount of money generated by a company's business operations after accounting for operating expenses.

Net Working Capital

A measure of a company's short-term financial health and liquidity, calculated as current assets minus current liabilities.

Profit Margin

A financial metric expressing the ratio of a company's net income to its sales, demonstrating the percentage of revenue that exceeds the cost of goods sold.