Q&AGraded AssessmentsKindly note that the below-given questions are graded. Question 1/3MandatoryFinancial StatementsA company pays advertising expenses of $50,000 every month. Which of the following financial statements would be directly impacted due to this financial event?Cash flow statement and balance sheetBalance sheetCash flow statement and income statementBalance sheet and income statement

The correct answer is "Cash flow statement and income statement".

Here's why:

1. Cash Flow Statement: This statement provides an overview of the company's inflows and outflows of cash. When the company pays advertising expenses, it's an outflow of cash. Therefore, this event would be recorded in the cash flow statement.

2. Income Statement: This statement shows the company's revenues and expenses during a particular period. Advertising expenses are considered as an operating expense and therefore, would be included in the income statement.

The Balance Sheet wouldn't be directly affected by this event because it shows the company's assets, liabilities, and equity at a specific point in time, not the expenses.