Which of the following statements about the relationship between the transactions on the Income Statement and Balance Sheet are TRUE:

1. You

   buy a $100 item of clothing on your debit card and you treat the clothing as an

   expense (not an asset). The immediate impact of this transaction at the time of

   purchase involves incurring an expense of $100, a decrease in profit of $100, a

   decrease in assets of $100 and a decrease in wealth of $100.

2. You

   receive $100 in interest on a savings account. The immediate impact of this transaction

   to the time of receiving the interest is an income of $100, an increase in

   profit of $100, an increase in assets of $100 and an increase in wealth of

   $100.