When a company receives a government bailout of $100, which financial statement is directly affected?

When a company receives a government bailout, the primary financial statement that is directly impacted is the Balance Sheet. This is because a bailout typically increases the company’s cash assets, which is recorded under current assets on the balance sheet. Simultaneously, it may also be recorded as an increase in liabilities or equity, depending on how the bailout is structured (for example, as a loan versus as equity funding).

The Cash Flow Statement is also affected because the incoming cash from the bailout would be recorded in the financing activities section as an inflow, reflecting an increase in cash. Although the Income Statement may indirectly reflect changes in financial performance over time due to the bailout, at the moment of receiving the funds, it does not immediately affect revenues or expenses directly.

In summary, while the bailout impacts multiple statements, the Balance Sheet shows the immediate effects on the company’s financial position, which is why it is considered the most directly affected statement.