Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 39 - No. 32)
If a business purchases inventory for cash, what is the effect on the asset section of the balance sheet?
Assets increase.
Assets decrease.
Assets stay the same.
It depends on the inventory's value.
Explanation
When inventory is purchased for cash, the cash (asset) decreases, but the inventory (asset) increases; thus, total assets remain the same.
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