Newton Company purchases equipment on account. What are the effects on the fundamental accounting equation?

Question

Quizplus · Accepted Answer

When Newton Company purchases equipment on account, it acquires a new asset (the equipment), which increases its total assets. Since the purchase is on account, it means the company incurs a liability (such as accounts payable) to pay for the equipment later, increasing its total liabilities. There is no immediate effect on owner's equity from this transaction.

Newton Company Purchases Equipment on Account