Question
Asked Feb 9, 2019
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What Statements Do The Following Belong To and Do They Appear On One Or More

1) Fund To Retire Bonds
2) Retained Earnings
3) Trucks
4) Cash
5) Prepaid Insurance
6) Investment in XYZ
7) Additional Paid-Capital
8) Copyrights
9) Machinery

10) Merchandise Inventory

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Expert Answer

ItemsStatements they belong toReason
1) Fund To Retire BondsBalance Sheet, Income StatementEvery year a particular amount is deducted from the income of the entity and added to the funds for retirement of bonds, so it appears in the income statement. Also, the cumulative amount added to the fund so far appears in the balance sheet as part of the equity therefore, it appears in the balance sheet as well.
2) Retained EarningsBalance Sheet, Income StatementEvery year after paying all other expenses, the entity calculates net proft and distributes divident out of the final net proft. The amount remaining after paying the net proft it transferred to reatained earnings. The annual transfer amount appears in the income statment and the cumulative amount of all the previous year appears in the balance sheet as part of equity.
3) TrucksBalance Sheet, Cash flow Statement (Investing Activity/)Part of Non-current Assets (tangible) or Fixed Assets. They are also part of the investing activities in Cash flow because they are long term assets.
4) CashBalance Sheet, Cash Flow StatementPart of current assets in the balance sheet and the final outcome of the cash flow account.
5) Prepaid InsuranceBalance Sheet, Cash Flow StatementPart of current assets in the balance sheet because they represent money paid in advance and hence, are an asset. Also, appear in cash flow because cash is being paid out. They do not appear in income statement because the expense does not belong to the current period, it is for a future period for which payment is made in advance.
6) Investment in XYZBalance Sheet, Cash flow Statement (Inve...
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