Using the T-account approach:
A)Net income appears on the debit side of the Cash account under operating activities.
B)Payment of long-term debt appears on the debit side of the Cash account under financing activities.
C)Purchase of equipment appears on the credit side of the Cash account under operating activities.
D)An increase in Accounts Receivable appears on the debit side of the Cash account under operating activities.

Question

Quizplus · Accepted Answer

Net income is credited to Retained Earnings and debited to Cash under operating activities.The payment of long-term debt decreases Cash and,so,is credited to Cash under financing activities.Cash paid to purchase of equipment decreases Cash and,so,is credited to Cash under investing (rather than financing)activities.An increase in Accounts Receivable indicates there are sales are more than collections from customers;it is debited to Accounts Receivable and credited (rather than debited)to Cash under operating activities.

Using the T-Account Approach