Asked by Christopher Robin on Apr 30, 2024
Verified
Which of the following would result if a business purchased Equipment with a 40% down payment and the rest on open account?
A) Equipment would increase and Cash would decrease.
B) Accounts Payable would increase.
C) Since the equipment has not been paid in full, there is nothing to record.
D) Both A and B are correct.
Open Account
It generally refers to a commercial credit line that allows for the purchase of goods and services without immediate payment, payable at a later date.
Down Payment
An initial payment made when purchasing a good or service, typically a percentage of the total price, with the remainder due later.
Equipment
Tangible items used in the operation or production process of a business.
- Distinguish between different methods of asset acquisition (cash vs. credit).
Verified Answer
Learning Objectives
- Distinguish between different methods of asset acquisition (cash vs. credit).
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