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 dollar amounts. (Note that "Not Affected" means that the event does not affect that element of the financial statements or the event causes an increase in that element that is offset by a decrease in the same element.)Increase = IDecrease = DNot Affected = NAGarrison Company recognized $4,000 of service revenue earned on account.Assets Liabilities Stk. Equity Revenues Expenses Net Income Stmt of Cash Flows???????
What will be an ideal response?
(I) (NA) (I) (I) (NA) (I) (NA)
Recognizing revenue earned on account increases assets (accounts receivable) and stockholders' equity (retained earnings). It increases revenue, which increases net income. Because the revenue was earned on account, there is no effect on the statement of cash flows.
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