Question

The police department of the city of Newport purchased 10 new patrol cars at the beginning of the new budget year at a total cash price of $250,000. This purchase will __________.

a) Increase liabilities
b) Decrease assets
c) Increase expenses
d) Decrease equity

Answer 1

The purchase of the patrol cars will decrease assets for the police department of the city of Newport.

Step-by-step explanation:

The purchase of 10 new patrol cars by the police department of the city of Newport at a total cash price of $250,000 will decrease assets. Assets are resources owned by a company or organization, and the patrol cars are considered assets. When the police department purchases the cars, it uses cash to acquire these assets, resulting in a decrease in the amount of cash available, which is an asset for the department.