Most companies record an extremely large number of transactions in their cash account and do not rec

Most companies record an extremely large number of transactions in their cash account and do not rec

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Most companies record an extremely large number of  transactions in their cash account and do not record enough detail  for the information to be summarized. Therefore, the statement of  cash flows is prepared by analyzing all accounts except the cash  accounts. Remember that in accounting, all transactions affect at  least two accounts. If cash increases or decreases, at least one  other account also changes. If cash increases, that increase may  also decrease another asset account, such as accounts 
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Unformatted text preview: receivable (payment from customer on account) or equipment (sale of equipment), or increase the sales account (cash sales). Similarly, if cash decreases, there may be an increase in another asset account, such as inventory (purchase of inventory) or equipment (purchase of equipment), a decrease in a liability account, such as accounts payable (payment to creditor) or notes payable (payment on loan), or an increase in an expense account (payment to vendor )....
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This note was uploaded on 11/15/2011 for the course ACCT 2310 taught by Professor Staff during the Spring '09 term at Texas State.

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