A company buys equipment for $500,000 and signs a promissory note for the full amount. How does this transaction affect the accounting equation?

Question

Quizplus · Accepted Answer

The purchase of equipment is recorded as an increase in the asset account for property and equipment. The signing of the promissory note is recorded as an increase in the liability account for notes payable. Therefore, the best choice is B:Assets:  Property and equipment; Liabilities:  Notes payable; Stockholders' Equity; no change.

A Company Buys Equipment for $500,000 and Signs a Promissory