If $9,600 cash and a $31,000 note payable are given in exchange for some office machines to be used in a business:
A) Total assets are increased.
B) Total liabilities are decreased.
C) Total assets are decreased.
D) The equity is increased.

Question

Quizplus · Accepted Answer

The exchange of $9,600 cash and a $31,000 note payable for office machines results in an increase in total assets. This is because the office machines are now owned and can be used in the business, thus adding to the assets of the company. The note payable is a liability, but since cash was received in exchange, there is no net effect on total liabilities. The exchange does not directly impact equity.

If $9,600 Cash and a $31,000 Note Payable Are Given