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. You do not need to enter amounts. Enter only one letter for each element.Increase = IDecrease = DNo Effect = NBelvedere Company recognized $2,500 of depreciation expense on a delivery van.AssetsLiabilitiesEquityRevenuesExpensesNetIncomeCash Flow? ?????
What will be an ideal response?
(D) (N) (D) (N) (I) (D) (N)
Recognizing depreciation expense decreases assets (increases the contra-asset accumulated depreciation) and increases expenses, which decreases net income and equity. It does not affect the statement of cash flows.
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Financial statements for Maraby Corporation appear below:Maraby CorporationBalance SheetDecember 31, Year 2 and Year 1(dollars in thousands) Year 2Year 1Current assets: Cash and marketable securities$220 $190 Accounts receivable, net 190 160 Inventory 140 150 Prepaid expenses 70 80 Total current assets 620 580 Noncurrent assets: Plant & equipment, net 1,180 1,150 Total assets$ 1,800 $ 1,730 Current liabilities: Accounts payable$100 $120 Accrued liabilities 100 70 Notes payable, short term 160 160 Total current liabilities 360 350 Noncurrent liabilities: Bonds payable 450 500 Total liabilities 810 850 Stockholders' equity:
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