Purchasing a building for $150,000 by paying cash of $30,000 and obtaining a mortgage for $120,000 would:
A)increase assets and liabilities by $150,000.
B)increase liabilities by $120,000.
C)increase liabilities by $30,000.
D)decrease assets and liabilities by $120,000.

Question

Quizplus · Accepted Answer

The purchase increases assets by $150,000 (the building) and increases liabilities by $120,000 (the mortgage). The cash payment of $30,000 is an asset exchange, not affecting liabilities.

Purchasing a Building for $150,000 by Paying Cash of $30,000