Help me please with next question: "Assume equity (common stock) increased by $10. How will it affect three statements?". Thank you!
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No affect on the income statement.
On the cash flow statement, there will be a cash inflow of $10 on cash from financing activities.
On the balance sheet, there will be an increase in common stock of $10 and thus shareholder's equity will be up $10 and therefore cash will also be up by $10—balancing it out.
Cash from financing activities*
I wouldn't assume that the common stock was purchased with cash. It could have been an in-kind contribution. I would say that assets increased by $10, which may or may not be reflected in the cash account.
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