Which of the following is one effect of a purchase of $300 of supplies on credit?
A) It would increase liabilities by $300
B) It would decrease retained earnings by $300
C) It would decrease liabilities by $300
D) It would decrease cash asset $300

Question

Quizplus · Accepted Answer

Purchasing supplies on credit increases liabilities (accounts payable) by $300, as the company owes money for the supplies purchased but has not yet paid cash. This transaction does not directly affect retained earnings or cash assets at the time of purchase.

Which of the Following Is One Effect of a Purchase