For questions 1 through 6:Indicate how each event affects the financial statements model. 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 = NA(Note that "No Effect" means that the event does not affect that element of the financial statements or that the event causes an increase in that element, which is offset by a decrease in that same element.)Angstrom Co. provided $2,600 of services for a customer who paid $1,000 cash immediately and promised to pay an additional $1,600 one month later.AssetsLiabilitiesEquityRevenuesExpensesNet IncomeStmt of Cash Flows???????
What will be an ideal response?
(I) (NA) (I) (I) (NA) (I) (I)
This event increases revenue, net income, and equity (retained earnings) by $2,600. Cash increases by $1,000 and accounts receivable increases by $1,600, which results in an increase in assets of $2,600. It is reported as a $1,000 cash inflow for operating activities on the statement of cash flows.
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