Indicate how each event affects the horizontal financial statements model. Use the following letters to record your answer in the box shown below. If an event increases one account and decreases another account equally within the same element, record I/D. If an event has no impact on the element, record NA. You do not need to enter amounts.Increase = IDecrease = DNot Affected = NAOn September 1, Year 1, Ruiz Company loaned $10,000 to Alpha company. Show the effect of the December 31, Year 1 adjusting entry to accrue interest on Ruiz's financial statements.

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The Answer is

The adjusting entry to recognize interest on the note receivable will increase assets (interest receivable) and increase revenue (interest revenue), which increases net income and stockholders' equity. It does not affect the statement of cash flows.

Indicate How Each Event Affects the Horizontal Financial Statements Model