The effect on the accounting equation of the business buying a computer worth $900 paying $450 cash and owing $450 to be paid in 30 days' time is:.

Question

Quizplus · Accepted Answer

When the business buys a computer worth $900 and pays $450 cash, it increases the asset computers and decreases the asset cash. The remaining $450 owed in 30 days is recorded as a liability under accounts payable since the business has not yet paid for it. Hence, the accounting equation is affected in the following manner: 
Assets = Computers ($900) + Cash ($450) = $1350 
Liabilities = Accounts Payable ($450) 
Equity remains the same. 
Therefore, the correct answer is C.

The Effect on the Accounting Equation of the Business Buying