If equipment is purchased on credit:
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 shareholders' equity decreases.

Question

Quizplus · Accepted Answer

When equipment is purchased on credit, the asset account for equipment increases while the liability account for the credit purchase also increases. Therefore, both an asset and a liability increase.

If Equipment Is Purchased on Credit