A business buys a new computer system for £20,000 and agrees to pay the £20,000 to the supplier of the system in 30 days' time. What is the double entry in the statement of financial position to reflect this transaction?
A) Increase current assets by £20,000, increase current liabilities by £20,000.
B) Increase current assets by £20,000, increase non-current liabilities by £20,000.
C) Increase non-current assets by £20,000, increase non-current liabilities by £20,000.
D) Increase non-current assets by £20,000, increase current liabilities by £20,000.

Question

Quizplus · Accepted Answer

The computer system is a non-current asset, so it increases non-current assets by £20,000. The payment due in 30 days is a current liability, so it increases current liabilities by £20,000.

A Business Buys a New Computer System for £20,000 and Agrees