Hello, I wish you all a good evening. I just had a rather simple question about balance sheet transactions. Assuming we have a BS on 31.12, and no cash on the asset side, but retained earnings on the equity side, how are the first cashoutflows dealt with.? In this instance interest are paid, and an advertising campaign is paid right away too. Since there is no cash, do I just take out of the Retained earnings and fill up the bank (cash) before any transaction or do I need to overdraft? The question might seem silly and it is! But I just need to know, what to do, when theres no cash but fully of retained earnings at hand! Would be glad if someone coul give me a hint! Wish you a pleasant evening, morning or noon anyways...

Have you considered reading your study materials?