In Part I of the Assignment Document LP01 Accounting Assignment, identify next to each item which

statement the item would appear. The items listed could appear on the income statement (I), balance
sheet (B), or statement of cash flows (CF). Then, for each group, explain the difference between the
items in the set.

In Part II of the Assignment Document, you will discuss the relationship between the financial
statements.

Part I

Set 1:

__B___ Inventory, ending balance

__ I ___ Cost of goods (inventory) sold during the period

__CF__ Cash paid to suppliers during the period

__B___ Accounts payable, ending balance

Difference:

Set 2:

__B___ Accounts receivable, ending balance

__CF___ Cash received from customers

__ I ___ Sales

Difference:

Set 3:

__ I ___ Wage expense for the period

__B___ Wages payable, ending balance

__CF___ Cash paid for wages during the period

Difference:

Set 4:

__B___ Property, plant, and equipment, ending balance

__CF___ Cash paid for property, plant, and equipment during the period

__CF___ Cash received from selling property, plant, and equipment during the period

__ I ___ Depreciation expense during the period (expense of using property, plant, and equipment
during the period)

Difference:

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 Set 5:

__B___ Notes payable, ending balance

__CF___ Cash received from borrowing money during the period

__CF___ Cash used to pay off notes payable during the period

__ I ___ Interest expense during the period (expense of using borrowed money during the period)

Difference:

Part II

Discuss the Relationship between the financial statements identified:

Financial Statements reflect the effects of transactions on a business. The balance sheet reflects the
ending balance of assets, liabilities, and owners’ equity. Profit minus expenses is reflected on an income
statement, while the cash flow statement indicates incoming and outgoing finances from operating,
investing, and financing activities. All of which occur over a certain period of time or at a specific point in
time.

Income Statement: Indicates revenues less expenses = net income for a period of time

Balance Sheet: Indicates the ending balances of assets, liabilities, and owners’ equity at a point in time

Cash Flows: Indicates cash inflows and outflows from operating, investing, and financing activities for a
period of time.

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