What is the effect on the balance sheet of recording a $200 cash purchase of raw materials?
A) Assets decrease by $200 and stockholders' equity decreases by $200.
B) Assets and stockholders' equity do not change.
C) Assets increase by $200 and stockholders' equity increases by $200.
D) Assets increase by $200 and stockholders' equity does not change.

Question

Quizplus · Accepted Answer

The balance sheet remains balanced because while cash (an asset) decreases by $200, inventory (another asset) increases by $200 due to the purchase of raw materials, leaving stockholders' equity unchanged.

What Is the Effect on the Balance Sheet of Recording