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. Assume that Frank Company uses a perpetual inventory system.Increase = I Decrease = D No Effect = NA(Note that "No Effect" means that the event does not effect that element of the financial statements or that the event causes an increase in that element that is offset by a decrease in that same element.) Wetzel Company recorded a cash discount on goods recently purchased on account.AssetsLiabilitiesStk. EquityRevenuesExpensesNet IncomeStmt of Cash Flows???????
What will be an ideal response?
(D) (D) (NA) (NA) (NA) (NA) (NA)
A purchase discount reduces the cost of the inventory and the associated account
payable on the balance sheet. A purchase discount does not directly affect the income
statement or the statement of cash flows.
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