A business purchases equipment in exchange for a note payable.This transaction results in ________.
A) no journal entry because no cash has been paid
B) a debit to Notes Payable and a credit to Equipment
C) an increase in liabilities
D) a debit to Equipment and a credit to Accounts Payable

Question

Quizplus · Accepted Answer

This transaction increases liabilities because the business now owes money under the note payable, reflecting an obligation to pay in the future.

A Business Purchases Equipment in Exchange for a Note Payable