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.)Banks Co. performed $5,000 of services for customers on account.AssetsLiabilitiesEquityRevenuesExpensesNet IncomeStmt of Cash Flows???????
What will be an ideal response?
(I) (NA) (I) (I) (NA) (I) (NA)
Performing services on account increases assets (accounts receivable) and increases revenue, which increases net income and equity (retained earnings). It does not affect the statement of cash flows, as it does not affect cash.
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