Topics, 100 Accounting Resources, 100 Lecture List
12. if a company has assets of 500,000, liabilities of 200,000, and equity of 300,000 what would be the impact of purchasing 25,000 of equipment on account.
a. Assets increase to 525,000 and equity increases to 325,000
b. Asset decrease to 475,000 and liabilities increase to 225,000
c. Asset increase to 525,000 and liabilities increase to 225,000
d. Liabilities increase to 225,000 and equity increases to 325,000
e. Liabilities decrease to 175,000 and equity increases to 325,000
Recommendations – right down the accounting equation. Plug in original numbers. Determine which two effects the transaction will have on the accounting equation. Make sure the end result is in balance.
Answer
C
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