The following are several account titles that could appear on an income statement: 1. Cost of Goods

Question:

The following are several account titles that could appear on an income statement:

1. Cost of Goods Sold

2. Insurance Expense

3. Sales Revenues

4. Rent Expense

5. Dividend Revenue

6. Wage Expense

7. Supplies Expense

8. Interest Expense

9. Rent Revenue

10. Depreciation Expense

Several possible balance sheet accounts follow.

A. Cash

B. Merchandise Inventory

C. Retained Earnings

D. Unearned Sales Revenue

E. Interest Payable

F. Dividends Receivable

G. Fixed Assets

H. Rent Payable

I. Accounts Payable

J. Accounts Receivable

K. Premium on Bonds Payable

L. Allowance for Doubtful Accounts

M. deferred Income Taxes

N. Prepaid Rent

O. Wages Payable

P. Common Stock

Q. Supplies Inventory

R. Discount on Bonds Payable

S. Unearned Rent

T. Marketable Securities

U. Prepaid Interest

V. Bonds Payable

W. Accumulated Depreciation

X. Prepaid Insurance

(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) that 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.

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