If a company buys inventory on account:
A)cash decreases.
B)accounts payable increases.
C)net income increases.
D)total assets remain the same.

Question

Quizplus · Accepted Answer

When a company buys inventory on account, it means they are purchasing goods on credit, which increases their accounts payable. This does not affect cash or net income, but it does increase the total liabilities side of the balance sheet. Total assets remains the same as buying inventory increases both inventory and accounts payable, which are both part of current assets and current liabilities respectively, meaning there is no impact on total assets.

If a Company Buys Inventory on Account