Sigma Co. purchased supplies and paid the full purchase price in cash. The journal entry necessary to record this event includes a: a) credit to Supplies and a credit to Cash. b) debit to Cash and a credit to Supplies. c) debit to Supplies and a debit to Cash. d) debit to Supplies and a credit to Cash. Explain how the following journal entry affects the accounting equation: a) Both assets and liabilities increase. b) Both assets and liabilities decrease. c) Both assets and equity increase. d) Both liabilities and equity decrease. An understatement of ending inventory results in which of the following in the present period? a) Understatement of total assets. b) Overstatement of retained earnings. c) Understatement of cost of goods sold. d) Overstatement of net income. Xavier Company paid cash to purchase two identical inventory items. The first purchase cost $25.00 cash and the second cost $26.00 cash. Xavier sold one inventory item for $35 cash. Based on this information alone: a) cash flow from operating activities is $25.50 assuming a weighted average cost flow. b) the amount of cash flow from operating activities is not affected by the cost flow method. C) cash flow from operating activities is $25.00 assuming a FIFO cost flow. d) cash flow from operating activities is $26.00 assuming a LIFO cost flow