Liabilities and stockholders\u2019 equity were not involved and did not change. Raw material will increase by $ 50,000 on the balance sheet while cash decrease for the same amount. Debit your Cash account $4,000, and debit your Accumulated Depreciation account $8,000. Let\u2019s say you need to create journal entries showing your computers\u2019 depreciation over time. You predict the equipment has a useful life of five years and use the straight-line method of depreciation. Remember to make changes to your balance sheet to reflect the additional asset you have and your reduction in cash.<\/p>\n

What is Equipment Finance?<\/h2>\n

Rather, the equipment\u2019s cost will be reported in the general ledger account Equipment, which is reported on the balance sheet under the classification Property, plant and equipment. The purchase will also be included in the company\u2019s capital expenditures that are reported on the statement of cash flows in the section entitled cash flows from investing activities. The acquisition of fixed assets is reflected on the balance sheet as an increase in the Equipment fixed assets account and aggregated into the fixed assets line item. Purchases of equipment are reported on the statement of cash flows in the investing activities section.<\/p>\n

Also included are labor and materials to build the building; salaries of officers supervising the construction; and insurance, taxes, and interest during the construction period. Any miscellaneous amounts earned from the building during construction reduce the cost of the building. It will increase the fixed assets balance on the financial statement. It also increases the liability account if the payment is not yet made. Cash purchase is the process of purchasing material, fixed assets, and other services by using cash payment immediately. Instead of delaying payment, the company settles the payment after receiving goods or services.<\/p>\n