The accounting equation for Gudgeyes Enterprises is as follows:
$$\frac { \text { Assets } } { \$ 120,000 } = \frac { \text { Liabilities } } { \$ 60,000 } + \frac { \text { Equity } } { \$ 60,000 }$$
If Gudgeyes purchases office equipment on account for $\$ 12,000$, the accounting equation will change to

$\begin{array}{l}\text { \quad Assets }&\text { \quad Liabilities }&\text { Equity }\\end{array}$

Question

The accounting equation for Gudgeyes Enterprises is as follows:
$$\frac { \text { Assets } } { \$ 120,000 } = \frac { \text { Liabilities } } { \$ 60,000 } + \frac { \text { Equity } } { \$ 60,000 }$$
If Gudgeyes purchases office equipment on account for $\$ 12,000$, the accounting equation will change to

$\begin{array}{l}\text { \quad Assets }&\text { \quad Liabilities }&\text { Equity }\\end{array}$

Quizplus · Accepted Answer

When Gudgeyes purchases office equipment on account for $12,000, assets increase by $12,000 and liabilities also increase by $12,000, keeping the equity unchanged. Thus, the new equation is $132,000 = $72,000 + $60,000.