A purchase of a vehicle for cash would have what effect on the accounting equation?
A)Total asset amount remains the same.
B)Total liabilities are overstated.
C)Total owner's equity is overstated.
D)Both A and B are correct.

Question

Quizplus · Accepted Answer

A purchase of a vehicle for cash would decrease the cash asset account and increase the vehicle asset account by the same amount, resulting in no net change in the total asset amount. Therefore, option A is correct. Options B and C are incorrect as they do not reflect the impact of a cash purchase on the accounting equation. Option D is incorrect as only option A is correct.

A Purchase of a Vehicle for Cash Would Have What