A transaction caused a $100,000 increase in both assets and total liabilities. This transaction could have been:
A) Purchase for office equipment for $100,000 cash
B) Repayment of a $100,000 bank loan
C) Investment of $100,000 cash in the business by the owner
D) Purchase of office equipment for $120,000, paying $20,000 cash and issuing a note payable for the balance

Question

Quizplus · Accepted Answer

The correct transaction is D) Purchase of office equipment for $120,000, paying $20,000 cash and issuing a note payable for the balance. This transaction increases assets (office equipment) by $120,000, decreases assets (cash) by $20,000, resulting in a net increase in assets of $100,000, and increases liabilities (note payable) by $100,000.

A Transaction Caused a $100,000 Increase in Both Assets and Total