How does the purchase of supplies on account affect the accounting equation?
A)Assets increase;liabilities decrease
B)Assets increase;owner's equity increases
C)Assets increase;liabilities increase
D)Liabilities increase;owner's equity decreases

Question

Quizplus · Accepted Answer

When supplies are purchased on account, the assets increase (due to the addition of supplies), but so do the liabilities (due to the increase in accounts payable). This will result in an overall increase in both assets and liabilities, with no impact on owner's equity. Therefore, the best choice is C.

How Does the Purchase of Supplies on Account Affect the Accounting