Explain Transaction Entity Profit or Loss?

Explain the effect of each of the following transactions on an entity’s profit or loss and on its cash flows:
1.the purchase of new equipment which is then depreciated over its useful life.
2.the payment of a supplier’s invoice.
3.accounting for an accrued expense at then end of an accounting period.
4.the payment of dividend
5.the purchase of inventory for cash.
6.investing spare cash in a high-interest bank account, repayable at 7 days’ notice.

1. The purchase of the equipment has no effect on profit or loss but gives rise to a cash outflow when payment is made. The depreciation charges reduce profits (or increase losses) but have no cash flow implications.
2. The payment of a supplier's invoice has no effect on profit or loss but gives a rise to cash outflow in the accounting period in which the payment is made.
3. Accounting for an accrued expense reduces profit but has no cash flow effect.
4.The payment of a dividend has no effect on profit or loss but causes an outflow of cash.
5.The purchase of inventory for cash causes an outflow of cash but has no immediate impact on profit or loss. The impact on profit or loss is delayed until the inventory is used or sold.
6.This is a transfer from cash to a cash equivalent. This is not a cash flow and there is no effect on profit or loss.

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