Question

What would be the effect on the accounts if the business purchased equipment on account?

OA. An asset would be debited and a Liability credited.
OB. An asset would be debited and Liability debited.
Oc. An asset would be debited and an expense debited.
OD. Expense would be debited and Liability credited.

Answer 1

When the business purchases equipment on account, an asset account would be debited and a liability account would be credited.

Step-by-step explanation:

When a business purchases equipment on account, it means that they are buying the equipment but not paying for it immediately. This transaction would affect the accounts by debiting an asset account and crediting a liability account.

The equipment is an asset because it is something of value that the business owns. So, the asset account would be debited to increase the value of the equipment.

On the other side, the business would have a liability because they owe money for the equipment. The liability account would be credited to increase the amount owed to the supplier of the equipment.

So, the correct answer is OA. An asset would be debited and a Liability credited.