The accounting equation for Long Company shows an increase in its assets and an increase in its liabilities.Which of the following transactions could have caused that effect?

Question

Quizplus · Accepted Answer

When equipment is purchased on credit, it increases the assets (equipment) and liabilities (accounts payable). Option A does not cause an increase in liabilities. Option B does not cause an increase in liabilities or assets, only cash. Option D only increases assets (supplies), not liabilities. Option E only decreases assets (cash), not liabilities.

The Accounting Equation for Long Company Shows an Increase in Its