DQ 2 Essay Example | Topics and Well Written Essays - 250 words

DQ 2 - Essay ExampleThere are three main financial statements that are usually bear upon when a high society makes any action. Purchase of an asset does not qualify as an expense, since it is a finance activity, which means that the income statement is not affected or changed. The balance sheet is used to record the final examination balances in the asset, liability and equity studys of a firm, which means that this transaction will affect the balance sheet. When the company takes the loan, the cash account (current asset) increases by $150,000, and the loan account (Liability) also increases by $150,000. When the company purchases the asset, the cash account (current asset) reduces by $150,000, and the equipment account (Long-term asset) increases by $150,000. The other financial statement that is affected is the cash flow statement, since the transaction of purchasing the asset is a cash flow for an commit activity. In this case, the cash flow for investing activities will b e increased by