Orlando Company paid $620 cash to purchase raw materials. How would this transaction affect Orlando's financial statements? $$\begin{array} { | c | c | c | c | c | c | c | c | c | l | l | l | }
\hline { \text { Assets } } &&& = & \text { Liab. } & + & \text { Equity } & \text { Rev. } & - & \text { Exp. } & = & \text { Net Inc. } \
\hline \text { Cash } & + & \begin{array} { c }
\text { Raw } \
\text { Matls. } \
\text { Inv. }
\end{array} & & & & & & & & & \
\hline
\end{array}$$

Question

Orlando Company paid $620 cash to purchase raw materials. How would this transaction affect Orlando's financial statements? $$\begin{array} { | c | c | c | c | c | c | c | c | c | l | l | l | } 
\hline  { \text { Assets } } &&& = & \text { Liab. } & + & \text { Equity } & \text { Rev. } & - & \text { Exp. } & = & \text { Net Inc. } \
\hline \text { Cash } & + & \begin{array} { c } 
\text { Raw } \
\text { Matls. } \
\text { Inv. }
\end{array} & & & & & & & & & \
\hline
\end{array}$$

Quizplus · Accepted Answer

The transaction involves paying cash to purchase raw materials, which decreases cash (an asset) by $620 and increases raw materials inventory (another asset) by $620. There is no effect on liabilities, equity, revenue, expenses, or net income.

Orlando Company Paid $620 Cash to Purchase Raw Materials A)