Expand Your Critical Thinking

Financial Reporting Problem: Apple Inc.

CT$2\mathrm{.}1$ The financial statements of Apple Inc. are presented in Appendix A$.$ The complete annual report, including the notes to the financial statements, is available at the company$$s website.

Apple$$s financial statements contain the following selected accounts, stated in millions of dollars.

Accounts Payable

Cash and Cash Equivalents

Accounts Receivable

Research and Development Expense

Property, Plant, and Equipment

Inventories

Instructions

Answer the following questions.

What is the increase and decrease side for each account?

What is the normal balance for each account?

Identify the probable other account in the transaction and the effect on that account when:

Accounts Receivable is decreased.

Accounts Payable is decreased.

Inventories are increased.

Identify the other account$($s$)$ that ordinarily would be involved when:

Research and Development Expense is increased.

Property, Plant, and Equipment is increased.