Purchasing $1000 of inventory on credit affects the three financial statements as follows:
1. Income Statement: The income statement is not directly affected by the purchase of inventory on credit. The income statement shows the revenue earned and the expenses incurred during a specific period of time. The purchase of inventory on credit is not an expense, but it will be recorded as an expense when the inventory is sold.
2. Balance Sheet: The balance sheet is affected by the purchase of inventory on credit. The inventory is recorded as an asset on the balance sheet, and the accounts payable (the amount owed for the inventory purchase) is recorded as a liability. This increases the total assets and total liabilities on the balance sheet.
3. Cash Flow Statement: The cash flow statement is not directly affected by the purchase of inventory on credit. The cash flow statement shows the inflows and outflows of cash during a specific period of time. Since the purchase of inventory on credit does not involve any cash outflow, it will not be recorded on the cash flow statement until the inventory is sold and the accounts payable is paid.