Problem:
Assume the entity is using US GAAP, accrual-basis accounting.
For each of the following independent situations, determine the effect of that transaction on: net income; cash; total assets; total liabilities.
Complete the primer exercise by filling in the chart, showing in each area either I (increase), D (decrease), or NE (no effect). Do not leave any area blank! Each situation is independent unless indicated. (see below).
a. Net Income b. Cash c. Total Assets d. Total Liability
1. Capital contribution (patent)
2. dividend received
3. dividend declared
4. capital contribution (cash)
5. declared dividend paid
6. borrow money
7. repay principal (see #6)
8. pay interest on this loan (see #6)
9. Accrue interest on a payable
10. Sell land less than book value (cash)
11. sell land greater than book value (cash)
12. buy office supplies on credit
13. use office supplies (see #12)
14. collect cash in advance
15. do the related work (see #14)