(i) The Income Statement: An example of a transaction that only affects the income statement would be recognizing depreciation expense for the period. This reduces the net income for the period but does not directly affect the balance sheet (as the asset was already recorded when acquired), the statement of changes in equity (unless it results in a net loss for the period), or the statement of cash flows (as it is a non-cash expense).

(ii) The Statement of Changes in Equity: An example of a transaction that only affects the statement of changes in equity would be declaring and paying a dividend. This reduces retained earnings (part of equity) but does not affect net income (as it is not an expense), the balance sheet (as the reduction in cash and retained earnings offset), or the statement of cash flows (as it is considered a financing activity, not an operating or investing activity).

(iii) The Balance Sheet: An example of a transaction that only affects the balance sheet would be purchasing equipment for cash. This increases the equipment (an asset) and decreases cash (another asset), with no effect on the income statement (as it is not an expense), the statement of changes in equity (as it does not affect retained earnings), or the statement of cash flows (as it is considered an investing activity, not an operating or financing activity).

(iv) The Statement of Cash Flows: An example of a transaction that only affects the statement of cash flows would be borrowing money from a bank. This increases cash (an asset) and increases a liability (the loan), with no effect on the income statement (as it is not an expense), the statement of changes in equity (as it does not affect retained earnings), or the balance sheet (as the increase in cash and the liability offset).

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(i) The Income Statement: An example of a transaction that only affects the income statement would be recognizing depreciation expense for the period. This reduces the net income for the period but does not directly affect the balance sheet (as the asset was already recorded when acquired), the statement of changes in equity (unless it results in a net loss for the period), or the statement of cash flows (as it is a non-cash expense).

(ii) The Statement of Changes in Equity: An example of a transaction that only affects the statement of changes in equity would be declaring and paying a dividend. This reduces retained earnings (part of equity) but does not affect net income (as it is not an expense), the balance sheet (as the reduction in cash and retained earnings offset), or the statement of cash flows (as it is considered a financing activity, not an operating or investing activity).

(iii) The Balance Sheet: An example of a transaction that only affects the balance sheet would be purchasing equipment for cash. This increases the equipment (an asset) and decreases cash (another asset), with no effect on the income statement (as it is not an expense), the statement of changes in equity (as it does not affect retained earnings), or the statement of cash flows (as it is considered an investing activity, not an operating or financing activity).

(iv) The Statement of Cash Flows: An example of a transaction that only affects the statement of cash flows would be borrowing money from a bank. This increases cash (an asset) and increases a liability (the loan), with no effect on the income statement (as it is not an expense), the statement of changes in equity (as it does not affect retained earnings), or the balance sheet (as the increase in cash and the liability offset).

Knowee AI · Accepted Answer

(i) The Income Statement: An example of a transaction that only affects the income statement would be recognizing depreciation expense for the period. This reduces the net income for the period but does not directly affect the balance sheet (as the asset was already recorded when acquired), the statement of changes in equity (unless it results in a net loss for the period), or the statement of cash flows (as it is a non-cash expense).

(ii) The Statement of Changes in Equity: An example of a transaction that only affects the statement of changes in equity would be declaring and paying a dividend. This reduces retained earnings (part of equity) but does not affect net income (as it is not an expense), the balance sheet (as the reduction in cash and retained earnings offset), or the statement of cash flows (as it is considered a financing activity, not an operating or investing activity).

(iii) The Balance Sheet: An example of a transaction that only affects the balance sheet would be purchasing equipment for cash. This increases the equipment (an asset) and decreases cash (another asset), with no effect on the income statement (as it is not an expense), the statement of changes in equity (as it does not affect retained earnings), or the statement of cash flows (as it is considered an investing activity, not an operating or financing activity).

(iv) The Statement of Cash Flows: An example of a transaction that only affects the statement of cash flows would be borrowing money from a bank. This increases cash (an asset) and increases a liability (the loan), with no effect on the income statement (as it is not an expense), the statement of changes in equity (as it does not affect retained earnings), or the balance sheet (as the increase in cash and the liability offset).

Is it possible to think of an accounting transaction or event that affects only: (i) The income statement (ii) The statement of changes in equity (iii) The balance sheet (iv)The statement of cash flows

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