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Accounting and Its Use in Business Decisions

Comments about Module 1: Accounting and Its Use in Business Decisions - How Transactions affect Income Statements and Balance Sheets

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- Module: Module 1: Accounting and Its Use in Business Decisions
- Topic: How Transactions affect Income Statements and Balance Sheets
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  • aaa
    John Crespo Nigeria A company's balance sheet is a snapshotof the company's financial standpoint at a given point in time. While nearly all business activities end up reflected in the balance sheet at some point, transactions that involve assets, liabilitiesand equity affect the balance sheet immediately. By understanding accounting transactions that affect the balance sheet, you can make sure that you consider the accounting ramifications of your business decisions before you complete the proposed transactions.Purchases and Sales of AssetsThe purchase of assets for cash affects the balance sheet by reducing the cash account and increasing the fixed-assets account. While both of these accounts are listed in the asset portion of the balance sheet, cash is part of the current assets section and fixed assets are part of the long-term assets section. The sale of an asset for cash is accounted for similarly, but is a bit more complicated. When the asset is sold, both the asset's book value and any accumulated depreciation are removed from the booksat the same time that the cash account is increased by the sales price. If the sales price does not equal the book value,the difference is accounted for as a gain or loss on the sale of equipment. This gain or loss is recorded on the income statement.Purchases on CreditWhen a company purchases supplies or inventory on credit, the business will debitthe asset account (supplies or inventory) and credit the accounts-payable account.Almost always, accounts payable are considered to be current liabilities and areshown at the top of the liabilities section of the balance sheet. Accrued liabilities, which are other current liabilities not classified as accounts payable, such as accrued vacation liabilities and the short-term portion of loan payments, are usually listed immediately after the accounts payable account in the current section of the company's liabilities.
    2015-05-26 01:05:02

  • aaa
    Ritchelle Tanganim Philippines Through financial accounting process
    2015-03-22 03:03:43

  • aaa
    Rose Rakilee Papua New Guinea The income statement is the financial statement that reports a company's revenues and expenses and the resulting net income and the balance sheet is also known as the statement of financial position and it reflects the accounting equation.
    2015-02-24 23:02:54

  • aaa
    Angelica Ramirez United States of America According income make sales and balance sheets make assist fix assists.
    2015-01-12 17:01:28

  • aaa
    Adolphe NKOU BIKOE Cameroon 1 Transaction affecting only the balance sheet 2Transactions affecting income statement and /or balance sheet 3Exhibit 2 4Exhibit 3 DExhibit 4
    2015-01-10 16:01:22

  • aaa
    Zachary Bashore United States of America How do transactions affect income statements and balance sheets?
    2014-09-01 23:09:37

    • aaa
      Adolphe NKOU BIKOE Cameroon transactions affecting only a balance sheet since each transaction affecting business entity must be recorded in the accounting record analyzing a transaction before actually recording
      2015-01-10 16:01:52
    • aaa
      Abdirisak Khalif iise Somalia according income making sales and expenses. balance sheets making assist fix assist or variable assists and liability and capital.
      2014-09-11 08:09:30
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