What is the effect on the statement of financial position of a business buying supplies for cash?
A)increase asset supplies; increase asset bank.
B)decrease asset supplies; decrease asset bank.
C)decrease asset supplies; increase asset bank.
D)increase asset supplies; decrease asset bank.

Question

Quizplus · Accepted Answer

When a business buys supplies for cash, it increases the asset supplies as they acquire more inventory to sell or use in their operations. At the same time, they decrease the asset bank as they use cash to pay for the supplies. Thus, the effect on the statement of financial position would be an increase in asset supplies and a decrease in asset bank.

What Is the Effect on the Statement of Financial Position