The acquisition of inventory on open account will _____.
A)increase assets and liabilities
B)increase liabilities and decrease stockholders' equity
C)decrease assets and decrease liabilities
D)have no effect on the accounting equation

Question

Quizplus · Accepted Answer

Acquiring inventory on open account, which means buying inventory without immediately paying for it, would increase assets (inventory) and also increase liabilities (accounts payable). Therefore, both sides of the accounting equation (assets = liabilities + stockholders' equity) would increase.

The Acquisition of Inventory on Open Account Will _____