Share
Explore BrainMass

Effect of transactions on measurements (cash, accrual )

For each of the following transactions, indicate by what amount each of these types of measurements would be affected. Use parentheses to indicate that an event would cause a decrease. If an event does NOT involve an operating activity, place a zero in the spaces provided. The time period covered is the current month.
Operating Activity
Cash Basis Accrual Basis

A) Inventory for resale was purchased for $12,000 cash
B) Equipment was purchased for $2,500 cash
C) Rent of $2,000 was paid, $1,000 for the current month and $1,000 for the next month
D) Inventory that cost $2,700 was sold for $5,000 cash
E) Depreciation of $150 was recorded

See attached file for complete description of the problem

Attachments

Solution Preview

Please see the attached file for answer.

For each of the following transactions, indicate by what amount each of these types of measurements would be affected. Use parentheses to indicate that an event would cause a decrease. If an event does NOT involve an operating activity, place a zero in the spaces provided. The time period covered is the current month.
Operating Activity
Cash Basis ...

Solution Summary

The solution indicates for each of the following transactions by what amount each of these types of measurements (cash, accrual ) would be affected:
A) Inventory for resale was purchased for $12,000 cash
B) Equipment was purchased for $2,500 cash
C) Rent of $2,000 was paid, $1,000 for the current month and $1,000 for the next month
D) Inventory that cost $2,700 was sold for $5,000 cash
E) Depreciation of $150 was recorded

$2.19