Problem 1-1a identifying effects of transactions on financial statements lo a1, p1 identify how each of the following separate transactions affects financial statements. for the balance sheet, identify how each transaction affects total assets, total liabilities, and total equity. for the income statement, identify how each transaction affects net income. for the statement of cash flows (using the direct method), identify how each transaction affects cash flows from operating activities, cash flows from financing activities, and cash flows from investing activities. for increases, select a “+” in the column or columns. for decreases, select a “–” in the column or columns. if both an increase and a decrease occur, select a “+/–” in the column or columns. the first transaction is completed as an example.