Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 16 - No. 7)
What is the impact on the accounting equation when a company purchases equipment for cash?
Assets increase, liabilities increase.
Assets decrease, liabilities increase.
Assets increase, liabilities decrease.
The composition of assets changes; no net effect.
Explanation
Cash (an asset) decreases, while equipment (another asset) increases. This doesn't change overall assets or affect liabilities or equity.
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