Final answer:
Business activities such as receiving customer payments or taking out a loan can affect a company's financial statements in different ways. In the banking industry, the money listed as assets may not be present due to the nature of fractional-reserve banking. The value of loans in the secondary market is contingent on borrower reliability and prevailing economic interest rates.
Step-by-step explanation:
When analyzing events that affect a company's financial statements, such as those experienced by Book myer Company, it is important to consider how various business activities can impact the balance sheet. For example: An increase in assets and a decrease in liabilities may occur when a company receives cash from customer payments, decreasing accounts receivable (asset) and reducing borrowed funds (liability). An increase in liabilities and a decrease in equity might be the result of the company taking out a loan (increasing liabilities), which could also involve company losses reducing retained earnings (equity).
An increase in revenue coupled with a decrease in expenses can happen when a company achieves higher sales while concurrently cutting costs. No change in assets, liabilities, equity, revenue, or expenses might suggest that a particular business event did not have a financial impact or that multiple effects offset each other. Furthermore, understanding shifts in the financial markets can help assess the quantity of loans made and received. Changes such as a decrease in interest rates or an increase in economic optimism could encourage more lending activity.