Problem:
The following three scenarios describe various practices that a company management team undertook to increase or decrease reported net income, the amount reported as assets and liabilities, or reported cash flow for the accounting period.
Discuss the effects on the income statement, balance sheet, and cash flow statement for each of the following situations:
Scenario 1: On July 16, the business owner took home, for personal use, office supplies that cost the company $478.
Scenario 2: The company accepted a note from the chief executive officer and loaned him $50,000. But the note has no due date, and will only be repaid if the CEO is fired.
Scenario 3: On December 15, a clerk ordered $15,000 of inventory to be delivered at the end of the year. The clerk asked the supplier to delay billing until the first of next year.
Your answers should contain factual information for each situation.