When a firm transacts business, the action's effects ripple through the financial statements. In accounting courses, you focus on classifying transactions in terms of debits and credits to accounts. Now, let's look past ledger entries and understand how different actions affect the balance sheet and income statement. Evaluate the following activities of this firm and identify what accounts are affected and how:
1. The firm buys land with $100,000 in cash to use in a future project.
will by $100,000.
will by $100,000.
2. The firm uses credit to purchase raw materials for production worth $15,000.
will by $15,000.
will by $15,000.
3. A customer pays $7,500 to settle its account with the firm.
will by $7,500.
will by $7,500.
4. The firm pays monthly rent and utilities of $6,000 in cash.
will by $6,000.
will by $6,000.
5. The firm issued new long-term bonds at their par value of $100,000.
will by $100,000.
will by $100,000.
6. This month's sales are $200,000, although the firm has received only $150,000 in cash so far.
will by $150,000.
will by $50,000.
will by $200,000.
7. The firm sells inventory valued at $40,000 to a customer for $50,000 in cash.
will by $40,000.
will by $40,000.
will by $50,000.
will by $50,000.