A business paid $40,000 cash to purchase equipment.The business would:

Question

Quizplus · Accepted Answer

When a business pays cash to purchase equipment, it would debit Equipment account for $40,000 and credit Cash account for $40,000. Option A, C, and D are incorrect because they do not follow the correct accounting treatment for this transaction. Debiting Accounts Payable, Note Payable or crediting Accounts Payable for this transaction suggests that the business is purchasing the equipment on credit, and not for cash.

A Business Paid $40,000 Cash to Purchase Equipment