Inventory purchased on credit:
A)decreases the amount of assets.
B)increases the amount of liabilities.
C)increases the amount of equity.
D)decreases the amount of equity.

Question

Quizplus · Accepted Answer

When inventory is purchased on credit, a liability is incurred as the company owes the supplier money. This increases the amount of liabilities on the balance sheet. There is no impact on the amount of assets or equity at the time of purchase.

Inventory Purchased on Credit