Reference no: EM131054648
Consider the Current Asset accounts (Cash, Accounts Receivable and Inventory) indivuidally and as a group. What impact will the following transaction have on each account AND current asset in total? (Increase, decrease, no change) (hint, each transaction has two sides that are equal in amount but opposite in sign. Consider whether the sides offset within current assets or one side is recorded somewhere else.) Don't concern yourself with any changes to the liabilities side of the alance sheet, only asset changes.
Ex. The purchase of a fixed asset for cash
Answer: Cash (decrease; current asset (decrease)
1. The purchase of a fixed asset on credit
2. The purchase of inventory for cash
3. The purchase of inventory for credit
4. Customers payment of an account receivable
5. Writing off a customer's bad debt (assume the allowance process is in place)
6. The sale of a fixed asset for cash
7. The sale of inventory (at a profit) for cash
8. The sale of inventory (at a loss) for cash
9. The sale of inventory (at a profit) on credit)
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