A company's balance sheet is a snapshotof the company's financial standpoint at a given point in time. While nearly all business activities end up reflected in the balance sheet at some point, transactions that involve assets, liabilitiesand equity affect the balance sheet immediately. By understanding accounting transactions that affect the balance sheet, you can make sure that you consider the accounting ramifications of your business decisions before you complete the proposed transactions.Purchases and Sales of AssetsThe purchase of assets for cash affects the balance sheet by reducing the cash account and increasing the fixed-assets account. While both of these accounts are listed in the asset portion of the balance sheet, cash is part of the current assets section and fixed assets are part of the long-term assets section. The sale of an asset for cash is accounted for similarly, but is a bit more complicated. When the asset is sold, both the asset's book value and any accumulated depreciation are removed from the booksat the same time that the cash account is increased by the sales price. If the sales price does not equal the book value,the difference is accounted for as a gain or loss on the sale of equipment. This gain or loss is recorded on the income statement.Purchases on CreditWhen a company purchases supplies or inventory on credit, the business will debitthe asset account (supplies or inventory) and credit the accounts-payable account.Almost always, accounts payable are considered to be current liabilities and areshown at the top of the liabilities section of the balance sheet. Accrued liabilities, which are other current liabilities not classified as accounts payable, such as accrued vacation liabilities and the short-term portion of loan payments, are usually listed immediately after the accounts payable account in the current section of the company's liabilities.