mize company provided $45,500 of services on account, and collected $38,000 from customers during the year. the company also incurred $37,000 of expenses on account, and paid $32,400 against its payables. how do these events impact the elements of the financial statements model?
1. Assets: The company's accounts receivable will increase by $45,500 as a result of providing services on account. The cash account will increase by $38,000 as a result of collecting payments from customers.
2. Liabilities: The accounts payable will increase by $37,000 as a result of incurring expenses on account. The accounts payable will decrease by $32,400 as a result of paying off some of the payables.
3. Equity: The net income for the year will be affected by the revenues ($45,500) and expenses ($37,000), resulting in a net income of $8,500. This will increase the equity of the company.
Overall, the company's assets, liabilities, and equity will be impacted by these events. The net result of these transactions will increase the company's total assets, total liabilities, and total equity.
1. Assets: The provision of services on account will increase the accounts receivable balance, which is an asset. Therefore, the provision of $45,500 of services on account will increase the assets by $45,500.
2. Liabilities: The collection of $38,000 from customers will reduce the accounts receivable balance, which is a liability. Therefore, the collection of $38,000 from customers will reduce the liabilities by $38,000.
3. Equity: These events do not directly impact the equity of the company.
4. Income Statement: The provision of $45,500 of services on account will increase the revenue on the income statement. The $37,000 of expenses on account will increase the expenses on the income statement. The net impact on the income statement will be an increase in revenue and an increase in expenses.
5. Cash Flow: The collection of $38,000 from customers will increase the cash flow from operating activities. The payment of $32,400 against payables will decrease the cash flow from operating activities.
In summary, the provision of services and collection of cash will increase assets, the incurrence of expenses will increase expenses, the payment of payables will decrease liabilities, and the revenue and expenses will impact the income statement.