Question

If a company paid $1860 cash for the office equipment purchased on May 3, which accounts are affected?

a) Cash and Equipment

b) Accounts Payable and Equipment

c) Accounts Receivable and Cash

d) Equipment and Prepaid Expenses

Answer 1

The accounts affected are Cash and Equipment.

Step-by-step explanation:

The correct answer is a) Cash and Equipment.

When a company pays cash for office equipment, both the Cash account and the Equipment account are affected.

Here's how the journal entry would look:

1. Debit Equipment for $1,860 (to increase the Equipment account)
2. Credit Cash for $1,860 (to decrease the Cash account)