When a company buys equipment for $60,000 and pays for one third in cash and the other two thirds is ﬁnanced by a note payable, which of the following are the effects on the accounting equation?

Question

Quizplus · Accepted Answer

The company pays $20,000 in cash (one third of $60,000), decreasing cash, and finances $40,000 with a note payable, increasing liabilities. Equipment increases by $60,000, so total assets increase by $40,000 ($60,000 equipment - $20,000 cash).

When a Company Buys Equipment for $60,000 and Pays for One