Celery Company has assets of $150,000, liabilities of $90,000, and equity of $60,000. It buys supplies for cash $5,000. What effect would this transaction have on the accounting equation?
A) Assets, $5,000 increase, equity, $5,000 increase.
B) Assets, $5,000 increase, equity, $5,000 decrease.
C) Liabilities, $5,000 increase, equity, $5,000 decrease.
D) Assets, $5,000 decrease, equity, $5,000 decrease.
E) Assets, no effect; liabilities, no effect

Question

Quizplus · Accepted Answer

The purchase of supplies for cash decreases one asset (cash) and increases another asset (supplies) by the same amount, resulting in no net effect on total assets, liabilities, or equity.

Celery Company Has Assets of $150,000, Liabilities of $90,000, and Equity