Financial Statements and Transactions

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Financial Statements and Transactions

Category: Essay

Subcategory: Accounting

Level: College

Pages: 2

Words: 550

Financial Statements and Transactions
Financial Statements and Transactions
Financial records provide short and long-term information indicating the flow of cash inside and outside the business. All transactions are recorded through a data entry process which makes up day to day bookkeeping, while comprehensive information is entered into a ledger with time (Gheorghe, 2014). The activity of selling and buying facilitates company’s daily financial transactions, hence the source of monetary equations which forms financial statements. Business events such as accounting processes have economic impacts on the financial statements as discussed below.
The impacts of Accounting Transactions in Financial Statements
Any transaction that involves recording liabilities, equity or assets affects financial statements like the balance sheet. The balance sheet of a business reflects an economic standpoint of a running company. When transactions like purchasing assets for cash takes place, a significant influence on the balance sheet would be a reduction in cash account while fixed assets account increases. Cash and assets transactions are recorded on one portion of a financial statement. When cash represents current assets, fixed assets, on the other hand, are considered to be long-term assets. Similarly, the sale of a fixed asset for cash will influence balance sheet records in the same manner. However, an accumulated depreciation, if any, are removed from the bo…

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