The effect on the statement of financial position of a business buying supplies for cash is to:
A) increase asset supplies; increase asset bank.
B) decrease asset supplies; decrease asset bank.
C) decrease asset supplies; increase asset bank.
D) increase asset supplies; decrease asset bank.

Question

Quizplus · Accepted Answer

Buying supplies for cash increases the asset supplies as more supplies are added to the business's assets. However, it decreases the asset bank because cash is used to pay for these supplies, reducing the amount of cash or bank balances the business has.

The Effect on the Statement of Financial Position of a Business