Accounting for IGCSE & O level - Final Statements (Section 6 - No. 38)
What effect does a company's purchase of equipment on credit have on the accounting equation?
Assets increase, liabilities decrease
Assets increase, liabilities increase
Assets decrease, liabilities increase
Assets decrease, liabilities decrease
Explanation
When equipment is purchased on credit, assets (equipment) increase and liabilities (accounts payable) increase.
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