If land is purchased for cash:
A) one asset increases and another asset decreases.
B) an asset increases and a liability increases.
C) an asset decreases and a liability decreases.
D) an asset decreases and shareholders' equity decreases.

Question

Quizplus · Accepted Answer

When land is purchased for cash, one asset (land) increases as it is now owned by the purchaser, and another asset (cash) decreases as it is now used to acquire the land. No liabilities or shareholders' equity are involved in this transaction.

If Land Is Purchased for Cash