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A company purchases $10,000 worth of equipment on account. What effect does this transaction have on the equity account?

A. Increases

B. Decreases

C. No effect.

2 Answers

4 votes

Answer:

The correct answer is C. No Effect

Step-by-step explanation:

It's in the book if you're in Accounting 1. Also, I took the pop quiz and got this answer correct! =)

User Srishtigarg
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4 votes

Answer:

No effect ( C )

Step-by-step explanation:

The purchase of an equipment on account has no effect on the equity account because purchasing equipment on account is a method of payment therefore it causes an increase in the asset of the company because equipment purchased is an asset acquired

equity accounts are made up of payments/investment money put into a business by the ownership of the business or it can come in form of residual income made from investment/business made on behalf of the company by its ownership types of such equity accounts are: preferred stocks, common stock, contributed surplus,treasury stock.

purchase of equipment will positively increase the assets account of the company.

User M Rajoy
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