Question

Home Accessories’ bank statement showed a $120 NSF check. Which of the following shows how recognizing this check will affect Home Accessories’ financial statements? Balance sheetIncome StatementStatement ofCash Flows Assets= Cash+Acc.Rec=Liab.+EquityRev.−Exp.=Net Inc.A.(120)+120=NA+NANA-NA=NA(120) OAB.(120)+NA=NA+(120)NA-120=(120)(120) OAC.NA+120=NA+120120-NA=120NAD.(120)+120=NA+NANA-NA=NA(120) IA

Answer 1

Answer:

Option A is the correct option.

Explanation:

As the options are not readable correctly, the options are listed as below

Balance sheet    Income Statement    Statement of   Cash Flows

Assets =Cash + Acc.Rec = Liab. + Equity Rev. − Exp. = Net Inc.

A. (120) + 120 = NA + NA NA - NA = NA (120) OA

B. (120) + NA = NA + (120) NA - 120 = (120) (120) OA

C. NA + 120 = NA + 120 120 - NA = 120 NA

D. (120) + 120 = NA + NA NA - NA = NA (120) IA

Option A is correct option as the cash is debited and the account received is credited. There is no liability, Equity Rev and Expense so the net income is 120.

In this context the option A is the only correct option.