Accord Corporation purchased land for $100,000 by a cash payment of $20,000 and promised to pay the remaining amount at a later period.What is the net effect of this transaction on the business's accounting equation?

Question

Quizplus · Accepted Answer

The land purchase increases assets by $100,000 (land) and decreases assets by $20,000 (cash), resulting in a net asset increase of $80,000. The remaining $80,000 is a liability, as it is a promise to pay later.

Accord Corporation Purchased Land for $100,000 by a Cash Payment