2.1 Adkins firm experienced an accounting event that affected its financial statements as indicated below. I beg your pardon of the following accounting events could have resulted in these effects on ABC"s statements?
Earned Revenue top top account.Earning revenue top top account boosts assets (accounts receivable) and also increases revenue, which rises net income and also equity (retained earnings). The does not impact cash flows.

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Revenue ~ above account amounted to $4,000. Cash collections of accounts receivable amounted to $2,300. Prices for the duration were $2,100. The company paid dividends of $450. Netincome because that the duration was...
Expenses space recorded when they space incurred.Revenue is videotaped in the period when that is earned.Revenue is recognized when earned and also expenses are well-known when incurred, regardless of as soon as cash is exchanged.
Assets ($4,400 + $1,500 + $8,000) = liabilities ($1,250) + EquityEquity = $12,650$12,650 = typical Stock + Retained income ($2,700 + $9,500 - $7,250)$12,650 = common Stock + $4,950Common stock = $7,700
Olaf firm began 2013 v $600 in its provides account. During the year, the firm purchased $1,700 of offers on account. The company paid $1,500 on accounts payable through year end. ~ above December 31, 2013, Olaf counted $700 of gives on hand. Olaf"s financialstatements for 2013 would show:
$700 of supplies; $1,600 of gives expense$700 of provides on hand is the offers asset on the balance sheet; $600 start balance+ $1,700 of provides purchased - $700 ending balance = $1,600 provides expense
Interest Revenue.Interest revenue is an earnings statement account. Unearned revenue, in spite of having the word "revenue" in that is title, is a legal responsibility account that appears on the balance sheet.
expenses and also revenuesThe matching concept refers to the equivalent of prices to the profits that those costs produce.
Which the the following explains the effects of a cases exchange transaction top top a company"sfinancial statements?
A cases exchange transaction will an outcome in either an increase in liabilities and a decrease in equity or a decrease in legal responsibility and rise in equity. It might or may not affect the revenue statement, however it will never impact the declare of cash flows, as it go not influence any asset, including cash.
Recorded supplies expense at the end of the period.Recording supplies expense at the finish of the period is an asset use transaction that decreases heritage (supplies) and decreases same (supplies expense decreases maintained earnings). Purchase a maker for cash and investing cash in an interest earning account space asset exchange transactions. Accumulation salary expense is a cases exchange transaction.
On December 31, 2013, Farrell Co. Owed $1,500 in wages to employees who had actually worked during December however would be payment in January. If the year-end mediate is correctly recorded top top December 31, 2013, what will certainly be the result of the accumulation on the following itemsfor Farrell?
Net Income: decreased; Cash circulation from operation Activities: No EffectRecording the adjusting entrance will rise salaries expense, i beg your pardon will alleviate net income and also it will rise salaries payable, a liability. It will not impact cash flows.

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An rise in liabilitiesRecognizing an cost may it is in accompanied by an increase in liabilities (i.e. Account payable, earnings payable) or a decrease in legacy (i.e. Cash, prepaid rent or insurance).
James agency paid $1,800 for one year"s rental in advancement beginning ~ above October 1, 2013. James"s 2013 income statement would report rent expense, and its statement of cash flowswould report cash outflow for rent, respectively, of
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