Which of the following transactions do not affect cash?
1)Convert debt to common stock
2)Credit sales
3)Purchase a fixed asset by issuing debt
4)Accept rental deposit
5)Write-off of prepaid expenses
A)1 and 2
B)4 and 5
C)1,2,and 3
D)3,4,and 5
E)1,2,3,and 5

Question

Which of the following transactions do not affect cash? 
1)Convert debt to common stock
2)Credit sales
3)Purchase a fixed asset by issuing debt
4)Accept rental deposit
5)Write-off of prepaid expenses
A)1 and 2
B)4 and 5
C)1,2,and 3
D)3,4,and 5
E)1,2,3,and 5

Quizplus · Accepted Answer

Transactions that do not affect cash include converting debt to common stock (1), making credit sales (2), purchasing a fixed asset by issuing debt (3), and writing off prepaid expenses (5). These transactions either involve exchanging one non-cash asset for another, recognizing revenue or expenses without the immediate exchange of cash, or altering the composition of equity or liabilities without a cash transaction.

Which of the Following Transactions Do Not Affect Cash