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What impact would the purchase of an asset have on our balance sheet, income statement and...

What impact would the purchase of an asset have on our balance sheet, income statement and cash flow statement?

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Answer #1

If Asset is purchased net asset then fixed asset portion will increase and the cash portion of current assets will decrease.In case asset is purchased in credit then fixed asset portion will increase and also there will be increase in current liabilities.

In Income statement the depreciation will increase at end of year as asset's depreciation are shown in income statement.However at the beginning of year there will be no change.

Cash flow in investing activities will decrease and it will be a negative cash flow part.

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