How would a purchase of inventory on credit affect the income statement?
A) It would increase liabilities
B) It would decrease retained earnings
C) It would increase assets
D) Both A and C, above
E) None of the above

Question

Quizplus · Accepted Answer

A purchase of inventory on credit affects the balance sheet by increasing both assets (inventory) and liabilities (accounts payable), but it does not directly affect the income statement until the inventory is sold.

How Would a Purchase of Inventory on Credit Affect the Income