A corporation purchased factory equipment using cash.Which of the following statements regarding this purchase is correct?

Question

Quizplus · Accepted Answer

When a corporation purchases factory equipment using cash, the total assets will increase by the amount of cash used to make the purchase. The cost of the equipment is not an expense at the time of purchase, but instead is recorded as a long-term asset on the balance sheet. There is no impact on total liabilities or current stockholders' equity.

A Corporation Purchased Factory Equipment Using Cash