P5—5 (Effects oftransactions on the income statement and statement of cash flows) Ten transactions are listed below. For each one, indicate what specific accounts are affected as well as the direction (increase or decrease) of the effect. Also indicate whether the transaction would increase or decrease both net income (revenues minus expenses) on the income state¬ ment and net cash flow from operations (operating cash inflows minus operating cash out¬ flows) on the statement of cash flows. Use the following key: increase (+), decrease (—), and no effect (NE). The first one has been completed for you. Net Net Operating Transaction Accounts Direction Income Cash Flow 1. Issued ownership securities for cash. Cash + Contributed Capital + NE NE 2. Purchased inventory on account. 3. Sold a service on account. 4. Received cash payments from customers on previously recorded sales. 5. Purchased equipment for cash. 6. Paid cash to reduce the Wages Payable account. 7. Sold a service for cash. 8. Paid off a long-term loan. 9. Made a cash interest payment. 10. Sold land for an amount greater than its cost. 246 Part 2 Use, Measurement, and Mechanics of Financial Statements