Use the information below to answer the following question(s):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.Increase = I Decrease = D No Effect = NAOn September 1, Year 1, Diaz Company loaned $10,000 to Ace Company. Show the effect of this transaction on Diaz's financial statements.
What will be an ideal response?
(NA) (NA) (NA) (NA) (NA) (NA) (D)
When a company loans money to another party, assets (notes receivable) increase and assets (cash) decrease, resulting in no net change to assets. It is reported as a cash outflow for investing activities.
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