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A. Purchase of Inventory
B. Retirement of a fully depreciated machine
C. Collection of Accounts Receivable
D. Amortization of Prepaid Insurance
E. Declaration of Cash Dividend
A. Purchase of Inventory. The purchase of inventory will affect both the income statement and balance sheet.
D. Amortization of Prepaid Insurance
Option D is the correct answer. As prepaid is the balance sheet item and amortization is an expense nature therefore this transaction will impact both balance sheet and income statement at the same time.
Option B could be, if the machine would have been sold in profit. Profit on disposal of asset.
purchase of inventory affect same time on balance sheet and income statement
