How does the purchase of equipment by signing a note affect the accounting equation?
A) assets increase; assets decrease
B) assets increase; liabilities decrease
C) assets increase; liabilities increase
D) assets increase; owner's equity increases

Question

Quizplus · Accepted Answer

When equipment is purchased by signing a note, it results in an increase in assets (equipment) and an increase in liabilities (notes payable). Therefore, the answer is C - assets increase and liabilities increase.

How Does the Purchase of Equipment by Signing a Note