Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 29 - No. 42)
Which of the following correctly describes the effect of a cash purchase on the basic accounting equation (Assets = Liabilities + Equity)?
Assets increase.
Assets decrease.
Liabilities increase.
Equity remains the same.
Explanation
A cash purchase swaps one asset (cash) for another (inventory), thus having no effect on the overall value of assets, liabilities, or equity.
Comments (0)
