Asked by Daisy Terrado on May 06, 2024
Verified
How does the purchase of supplies on account affect the accounting equation?
A) Assets increase; Liabilities decrease
B) Assets increase; Owner's Equity increases
C) Assets increase; Liabilities increase
D) Liabilities increase; Owner's Equity decreases
Accounting Equation
The fundamental equation of accounting, Assets = Liabilities + Shareholder's Equity, representing the relationship between a company's resources and claims against those resources.
Supplies
Items that are consumed or used up in the daily operations of a business, like office supplies or manufacturing materials.
Account
A record in the financial statements that represents a specific asset, liability, equity, revenue, or expense, used to track the changes in those balances.
- Identify the utilization of the accounting equation in business dealings.
- Differentiate between cash and credit transactions and their immediate effects on assets, liabilities, and equity.
Verified Answer
Learning Objectives
- Identify the utilization of the accounting equation in business dealings.
- Differentiate between cash and credit transactions and their immediate effects on assets, liabilities, and equity.
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