The purchase of office equipment on credit has what effect on the accounting equation?
A)Assets decrease and stockholders' equity decreases.
B)Liabilities increase and stockholders' equity decreases.
C)Assets increase and liabilities increase.
D)Assets decrease and liabilities decrease.

Question

Quizplus · Accepted Answer

When office equipment is purchased on credit, assets increase because the company now owns more equipment, and liabilities increase because the company has an obligation to pay for the equipment in the future.

The Purchase of Office Equipment on Credit Has What Effect