Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 45 - No. 29)
If a company purchases equipment with cash, what is the impact on the accounting equation?
Assets increase and liabilities increase.
Assets decrease and liabilities decrease.
Assets stay the same.
Assets increase and owner's equity increases.
Explanation
When a company buys equipment with cash, one asset (cash) decreases and another asset (equipment) increases; the total assets remain unchanged.
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