The purchase of a building with a down payment of cash and the signing of a note payable for the remainder would include a debit to both the asset Building, and a credit to the asset Cash and the liability Note Payable.

Question

Quizplus · Accepted Answer

This is correct accounting treatment for the purchase of a building with a down payment of cash and a note payable for the remaining balance. The asset Building is increased by the amount of the purchase, and the asset Cash is decreased by the amount of the down payment. Additionally, the liability Note Payable is increased by the amount of the remaining balance.

The Purchase of a Building with a Down Payment of Cash