A transaction caused a $60,000 increase in both assets and total liabilities. This transaction could have been which of the following?
A) Purchase of office equipment for $60,000 cash.
B) Purchase of office equipment for $120,000, paying $60,000 cash and issuing a note payable for the balance.
C) Repayment of a $60,000 bank loan.
D) Investment of $60,000 cash in the business by the owner.

Question

Quizplus · Accepted Answer

Option B involves a purchase of office equipment for a total of $120,000, with $60,000 paid in cash and the remaining $60,000 being financed through a note payable. This transaction would result in a $60,000 increase in assets (due to the purchase of equipment) and a $60,000 increase in liabilities (due to the note payable). Options A, C, and D involve transactions that would only affect either assets or liabilities, but not both.

A Transaction Caused a $60,000 Increase in Both Assets and Total