Your new firm uses cash on hand to purchase $5,000 of inventory.The two accounting transactions are to ________ cash by $5,000 and to ________ inventory by $5,000.
A)decrease; increase
B)decrease; decrease
C)increase; increase
D)increase; decrease

Question

Quizplus · Accepted Answer

When a firm uses cash to purchase inventory, its cash account decreases by the amount spent, and its inventory account increases by the same amount, reflecting the new asset acquired.

Your New Firm Uses Cash on Hand to Purchase $5,000