Which of the following transactions would cause an increase in both the assets and liabilities of a company?
A)Paying for the current month's rent.
B)Pay for inventory purchased 90 days ago.
C)Purchase of a building by issuing a note payable.

Question

Quizplus · Accepted Answer

Purchasing a building by issuing a note payable would cause an increase in both assets (the building) and liabilities (the note payable). Option A would only decrease assets (cash) and have no effect on liabilities. Option B would also only decrease assets (cash or accounts payable) and have no effect on liabilities.

Which of the Following Transactions Would Cause an Increase in Both