Final answer:
The 2nd entry records the cost of a sales which increases an expense. Expenses cause equity to decrease and decreases inventory, an asset.
Step-by-step explanation:
The subject of the question is Accounting, which falls under the Business category. The question is asking about the effect of a sales transaction on expenses, equity, and inventory.
The statement given is True. When a sales transaction occurs, it increases the expense of the organization. Expenses cause a decrease in equity, as they reduce the company's overall value. Additionally, a sale of inventory decreases the asset value of inventory, as it is being sold to customers.
For example, if a company sells $1,000 worth of products, it would record a sales revenue of $1,000, which increases equity. At the same time, it would also record a cost of goods sold expense for the amount it cost to produce or acquire those products, which decreases equity. The inventory value would also decrease by $1,000.