The Davis Company purchases a new delivery truck by making a 10% cash down payment and signing a note payable for the balance. How will assets, liabilities and owners' equity be affected by this transaction? Assets Liabilities Owners' Equity
A) decrease increase no change
B) increase increase no change
C) increase decrease increase
D) no change increase decrease

Question

Quizplus · Accepted Answer

The purchase of the truck increases assets (the truck itself) and the note payable increases liabilities. Owners' equity remains unchanged because the transaction involves exchanging one asset (cash) for another (truck) and taking on debt, without directly affecting the owners' equity.

The Davis Company Purchases a New Delivery Truck by Making