Purchasing office equipment on account has what impact on the accounting equation?

Question

Quizplus · Accepted Answer

Purchasing office equipment on account means that a liability is created because payment for the equipment will be made at a later date. This increases liabilities on the balance sheet. At the same time, the equipment purchased will be recorded as an asset, so assets increase as well. This transaction has no impact on stockholders' equity. Therefore, option B (Liabilities increase and assets increase) is the correct answer.

Purchasing Office Equipment on Account Has What Impact on the Accounting