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In the case of the purchase made through credit, the transaction is shown as an incease in liability through the increased accounts payable field. While the Purchase of supplies increased her debt, the purchase also added value to the business.
Expanding the Business
In one part of the scenarion Aunt Connie was seeking a loan to expand her business...
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This type of transaction can show income in advance. Aunt Connie can, in good faith, accept a future order from a client. Connie can show this transaction as future revenue through the "accounts recievable" portion of the financial statement, and as unearned revenue.
If Connie desired to borrow money against future sales, the above scenario can be used to show revenue to the bank that Connie is asking for the loan however, a bank may not be likely to lend Connie money based on the short life cycle of the busines so far...
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