Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 9 - No. 45)
What is the effect on the accounting equation of a transaction in which a company purchases equipment for cash?
Increases assets and decreases equity
Decreases assets and decreases liabilities
Increases assets and increases liabilities
One asset increases, one asset decreases, no change in total assets
Explanation
Purchasing equipment for cash swaps one asset (cash) for another (equipment), keeping total assets the same.
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