If a company purchases equipment for $65,000 by issuing a note payable:
A)Total assets will increase by $65,000.
B)Total assets will decrease by $65,000.
C)Total assets will remain the same.
D)The company's total owners' equity will decrease.

Question

Quizplus · Accepted Answer

When a company purchases equipment for $65,000 by issuing a note payable, the equipment will be added to the asset side of the balance sheet, thus increasing the total assets by $65,000. The note payable will also be recorded as a liability. The transaction will not affect the total owners' equity at this point.

If a Company Purchases Equipment for $65,000 by Issuing a Note