What would be the effect on the accounts if the business purchased equipment on account?
A) An asset would be debited and an expense debited.
B) Expense would be debited and Liability credited.
C) An asset would be debited and Liability debited.
D) An asset would be debited and a Liability credited.

Question

Quizplus · Accepted Answer

When a business purchases equipment on account, it acquires a new asset (the equipment) and incurs a liability (the obligation to pay for the equipment later). Therefore, the asset account for the equipment increases (debit) and the liability account (such as accounts payable) also increases (credit).

What Would Be the Effect on the Accounts If the Business