What is the effect on the balance sheet if a company purchases equipment using cash?
A) No effect on total assets; Decrease total liabilities; Increase total stockholders' equity
B) Increase total assets; Increase total liabilities; Increase total stockholders' equity
C) Decrease total assets; No effect on total liabilities; Increase total stockholders' equity
D) No effect on total assets; No effect on total liabilities; No effect on total stockholders' equity

Question

Quizplus · Accepted Answer

Purchasing equipment with cash decreases cash (an asset) and increases equipment (an asset) by the same amount, resulting in no net effect on total assets, liabilities, or stockholders' equity.

What Is the Effect on the Balance Sheet If a Company