Inventory is purchased on credit,when:
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 owners' equity decreases.

Question

Quizplus · Accepted Answer

When inventory is purchased on credit, an asset (inventory) increases, but so does a liability (accounts payable) since the company owes money for the purchase. Therefore, the correct choice is B – an asset increases and a liability increases.

Inventory Is Purchased on Credit,when