Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 17 - No. 7)
What is the immediate impact on a business when inventory is purchased on credit?
Increase in assets (inventory)
Increase in liabilities (accounts payable)
Decrease in assets (cash)
Decrease in owner's equity
Explanation
Inventory is an asset, and the company's liability is the accounts payable for the purchase.
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