When a company buys equipment for $60,000 and pays for one third in cash and the other two thirds is financed by a note payable,which of the following are the effects on the accounting equation?

Question

Quizplus · Accepted Answer

The company pays $20,000 in cash (one third of $60,000), decreasing cash, and finances $40,000 with a note payable, increasing liabilities. Equipment increases by $60,000, but total assets increase by only $40,000 because cash decreases by $20,000.

When a Company Buys Equipment for $60,000 and Pays for One