A business paid $50,000 cash to purchase equipment.The business would:

Question

Quizplus · Accepted Answer

When a business pays cash to purchase equipment, it would debit the Equipment account to increase its value on the balance sheet and credit Cash for the amount paid. Option A is incorrect because Accounts Payable represents amounts owed to vendors or creditors for goods or services purchased on credit, which is not the case here. Option C is incorrect because Notes Payable is a liability that arises when a business borrows money by issuing promissory notes, which is also not the case here. Option D is incorrect because the business did not purchase the equipment on credit, so there is no obligation to pay at a later date.

A Business Paid $50,000 Cash to Purchase Equipment