easy · Investment Banking accounting
If Zenith Logistics purchases $50,000 of equipment using cash, which of the following best describes the immediate impact on the three financial statements?
- Cash decreases by $50,000 and PP&E increases by $50,000 on the balance sheet, with no income statement impact.
- Total assets increase by $50,000 because the newly purchased equipment is added onto the balance sheet.
- Net income decreases by $50,000 right away because the entire equipment purchase is expensed immediately.
- Cash increases by $50,000 because acquiring the equipment is treated as a source of funds on the cash flow statement.
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