Question

Tonelli Trucking buys a $65,000 truck on credit. Which financial statement will be affected by this transaction?

A : balance sheet only
B : income statement, retained earnings statement, and balance sheet
C : income statement only
D : income statement and retained earnings statement only

Answer 1

A : balance sheet only

Step-by-step explanation:

In the given question, the truck was purchased on credit and the truck is a fixed asset that comes under the balance sheet only because in the income statement, the expenses and revenues are recorded whereas retained earnings records profit which is left to the company.

So, it affects the balance sheet only. As balance sheet records all types of assets and all types of liabilities plus shareholder equity.