A transaction caused a $60,000 increase in both total assets and total liabilities.This transaction could have been which of the following?
A)Purchase for office equipment for $60,000 cash.
B)Purchase of office equipment for $120,000,paying $60,000 cash and issuing a note payable for the balance.
C)Repayment of a $60,000 bank loan.
D)Investment of $60,000 cash in the business by the owner.

Question

Quizplus · Accepted Answer

In option B, the purchase of office equipment for $120,000 increases total assets by $120,000. Since $60,000 is paid in cash and a note payable is issued for the remaining $60,000, total liabilities also increase by $60,000, resulting in a $60,000 increase in both total assets and total liabilities. The other options do not have a corresponding increase in both total assets and total liabilities.

A Transaction Caused a $60,000 Increase in Both Total Assets