For the following transaction,identify the type of change that would have occurred in the accounting equation: Assets = Liabilities + Issued Capital + Opening retained profits + Revenue - Expenses - Dividends
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Inventory was purchased for cash.
A) An asset increased and another asset decreased.
B) An asset decreased and an expense increased.
C) An asset decreased and a liability decreased.
D) A liability increased and an expense increased.

Question

Quizplus · Accepted Answer

When inventory is purchased for cash, there is an increase in the asset "Inventory" and a decrease in the "Cash" asset. There is no change in liabilities, issued capital, retained profits, revenue, expenses or dividends. Therefore, the accounting equation would be affected with an increase in assets and a decrease in assets, thus option A is the correct one.

For the Following Transaction,identify the Type of Change That Would