When equipment is purchased on credit,
A) assets and liabilities increase.
B) assets increase and liabilities decrease.
C) assets and owner's equity increase.
D) assets and expenses increase.

Question

Quizplus · Accepted Answer

When equipment is purchased on credit, it increases the assets as the company acquires a new equipment, but it also increases the liabilities as the company owes money to the creditor. Therefore, both assets and liabilities increase.

When Equipment Is Purchased on Credit