Accounting: I need to know what effect an expense would have on Financial Statements in general.?

Question

I know it's a easy question but I really dont want to miss it on the test tomorrow. Also: if anyone could tell me how to record a deposit paid to a company if that company will repay the deposit at the end of the year?

Answer 1

An expense will go into the expenses section of the Income statement before arriving at net income or loss.

If you've paid a deposit to a company and expects to get it back later, you:
Dr Deposit refundable xxx
Cr Cash xxx

The deposit refundable sits in current assets until it's refunded. When you get it back, you:
Dr Cash xxx
Cr Deposit refundable xxx

Answer 2

expenses will lower the net income in the INCOME STATEMENT, and also retained earnings in balance sheet.

don't understand your second question.