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 = IDecrease = DNot Affected = NA(Note that "Not Affected" 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.)On January 1, Year 1, Monica Company paid $41,000 cash to purchase a truck.AssetsLiabilitiesEquityRevenueExpensesNet IncomeStmt of Cash Flows???????
What will be an ideal response?
(NA) (NA) (NA) (NA) (NA) (NA) (D)
Purchasing a truck for cash is an asset exchange transaction. The asset account, Cash, decreases and the asset account, Truck, increases. The purchase does not affect the income statement. Because the asset has a long term useful life the cash outflow is categorized as an investing activity on the statement of cash flows.
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Indicate whether the statement is true or false