Question

Six months ago, Joe purchased a new dining room table for $6,500. In preparing accurate personalfinancial statements, this purchase would appear as a(n):_________.1. Use assets on the client's balance sheet.2. Investment assets on the client's balance sheet.3. Variable outflow on the client's cash flow statement.4. Fixed outflow on the client's cash flow statement.a. 4 only.b. 1 and 3.c. 2 and 4.d. 1, 2, and 3.

Answer 1

The answer is B. 1 and 3

Step-by-step explanation:

After the purchase of the dining room table, Joe owns it and controls it. Therefore, it will be an asset on the client's balance sheet..

It is also a variable outflow on the client's cash flow statement because the outflow is one-off. It doesn't occur monthly or yearly.

It will be a fixed outflow on the client's cash flow statement if it occurs monthly, semiannual or annually, like payment on servicing debts which reoccurs.