Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 21 - No. 3)
What effect does a business purchasing inventory on credit have on the accounting equation?
Increases assets and decreases liabilities.
Decreases assets and increases liabilities.
Increases assets and increases liabilities.
Decreases assets and decreases liabilities.
Explanation
Purchasing inventory increases inventory (an asset), and increases Accounts Payable (a liability).
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