Transactions that affect earnings do not necessarily affect cash. Identify the effect, if any, that each of the following transactions would have upon cash and net income. a. Purchased $125 of supplies for cash.
b. Recorded an adjusting entry to record use of $45 of the above supplies.
c. Made sales of $1,220, all on account.
d. Received $850 from customers in payment of their accounts.
e. Purchased equipment for cash, $2,500.
f. Recorded depreciation of building for period used, $610.

Explanation:

Net income is the summation of all revenue generated substracted from all costs such as tax, interest and others it is the profit made.

Cash flow is the amount that the producer needed to spend when stating an accounting section romove from amount needed at the end of that accounting section.

Whenever transactions are carried out,

Cash flow and net income can be affected in ways that are not the same, once goods is sold the net income is noted by the manufacturer, let say he sell goods of $400 to a retailer if the retailer doesn't pay instantly, it mean the manufacturer has $400 cash less.i.e net income

a. Purchased $125 of supplies for cash.

✓There is decrease in cash by $125

✓There is no change as far as Net Income is concerned here.

b. Recorded an adjusting entry to record use of $45 of the above supplies.

✓There is No change to Cash here,

✓The net income is is decreased by $45.

c. Made sales of $1,220, all on account.

✓There is No change to Cash here,

✓The Net Income is increased by $1,220

d. Received $850 from customers in payment of their accounts.

✓ There is Cash increase, by. $850 ,

✓ There is No change to Net Income

e. Purchased equipment for cash, $2,500.

✓There is Cash is decreased by $2,500

✓ There is no change to Net Income

f. Recorded depreciation of building for period used, $610.

✓ There is No change to cash,

✓ there is decrease in Net income by

$610

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