Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 27 - No. 32)

If a company purchases equipment on credit, which accounts are affected?

Debit Equipment, Credit Cash

Debit Equipment, Credit Accounts Payable

Debit Cash, Credit Equipment

Debit Accounts Receivable, Credit Equipment

Purchasing equipment on credit increases the company's equipment (debit) and increases its obligation to pay (credit Accounts Payable)