The following are several account titles that could appear on an income statement. 1. Cost of Goods Sold 6. Wage Expense 2. Insurance Expense 7. Supplies Expense 3. Sales Revenue 8. Interest Expense 4. Rent Expense 9. Rent Revenue 5. Dividend Revenue 10. Depreciation Expense

a. b.

c. d.

e. f. gh. i. jk. l. Several possible balance sheet accounts Cash m. Merchandise Inventory Retained Earnings n. Unearned Sales Revenue o. Interest Payable p. Dividends Receivable q. Fixed Assets r. Rent Payable s. Accounts Payable t. Accounts Receivable u. Premium on Bonds Payable v. Allowance for Doubtful w. Accounts x. follow. Deferred Income Taxes Prepaid Rent Wages Payable Common Stock Supplies Inventory Discount on Bonds Payable Unearned Rent Marketable Securities Prepaid Interest Bonds Payable Accumulated Depreciation Prepaid Insurance E1 4—6 (Depreciation: a source of cash ?) REQUIRED:

a. Assume that you wish to compute the cash inflow or outflow associated with each income statement account. Match each income statement account with the related balance sheet account (or accounts) you would analyze in this computation.

b. For Sales Revenue, Cost of Goods Sold, and Interest Expense, indicate whether an increase in the related balance sheet accounts [identified in (a)] would be added to or deducted from the income statement item when computing the cash effect.