Asked by Mitika Mahajan Patil on May 20, 2024
Verified
Purchased supplies on credit
A) Increase assets, increase liabilities
B) Increase liabilities, decrease owner's equity
C) Increase assets, increase owner's equity
D) No effect
E) Decrease assets, decrease liabilities
F) Decrease assets, decrease owner's equity
Supplies on Credit
The acquisition of business supplies with an agreement to pay the supplier at a later date.
Accounting Equation
The fundamental equation of double-entry bookkeeping, stating that assets equal liabilities plus equity (Assets = Liabilities + Equity).
- Apprehend the consequences of financial transactions on the accounting equation.
Verified Answer
TP
Tiffany ParrishMay 25, 2024
Final Answer :
A
Explanation :
When supplies are purchased on credit, assets (supplies) increase, but there is also an increase in liabilities (accounts payable) since the payment has not been made yet. This follows the accounting equation (Assets = Liabilities + Owner's Equity), with both sides increasing by the same amount.
Learning Objectives
- Apprehend the consequences of financial transactions on the accounting equation.