On December 31, 2014, a restaurant purchased a $19,000 truck to be used for catering. It made a down payment of one-fourth of the purchase price. What combination of amounts would affect the 2014 income statement and statement of cash flows for the purchase of the truck? Statement of Cash Flow Income Statement

Question

Quizplus · Accepted Answer

The down payment of $4,750 (one-fourth of $19,000) affects the cash flow statement as a cash outflow. The income statement is not affected by the purchase of the truck itself, as it is a capital expenditure, not an expense.

On December 31, 2014, a Restaurant Purchased a $19,000 Truck