The transaction relating to purchase of an asset would be a cross transaction where the other account involved in the transaction is a current account, i.e. Cash a/c or Bank a/c (where the payment is made in cash or by cheque) a current asset or current liability (by taking over the vendors/sellers liability).
| Purchase of Asset | Dr. Asset a/c
Cr. Cash/Bank/Creditor a/c | Non-Current
Current |
|---|
Where the other account involved is a non-current account, the transaction would not be a cross transaction and as such would not result in a change in working capital.
| Purchase of Asset | Dr. Asset a/c
Cr. Capital/Debentures/Old Asset a/c | Non-Current
Non-Current |
|---|
Assets purchased by issuing capital or by accepting long term liability, or in exchange of another asset would be examples of such transactions.
