Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 30 - No. 30)
What is the impact on the accounting equation when a business purchases inventory on credit?
Assets increase, liabilities decrease.
Assets decrease, liabilities increase.
Assets increase, liabilities increase.
Assets decrease, equity increases.
Explanation
Inventory (an asset) increases, and Accounts Payable (a liability) increases.
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