Which of the following transactions affects the liabilities for Gravette, Inc.?
A) Supplies are purchased for cash by Gravette.
B) Gravette places an order for merchandise with a supplier; the merchandise will be shipped to Ernest White in 60 days.
C) The owners of Gravette invest $100,000 in the company.
D) Payment is made on a bank loan which Gravette had obtained 6 months ago.

Question

Quizplus · Accepted Answer

Payment made on a bank loan will reduce the liabilities of the company. Options A and C will increase assets (supplies and cash) and not affect liabilities. Option B just represents a purchase order and does not involve any actual transactions or affect liabilities.

Which of the Following Transactions Affects the Liabilities for Gravette