Question

Purchasing office equipment on account has what impact on the accounting equation? A. Stockholders' equity decreases and assets increase.B. Liabilities increase and assets increase.C. Assets decrease and liabilities decrease.D. Assets increase and stockholders' equity increases

Answer 1

B) Liabilities increase and assets increase.

Step-by-step explanation:

Purchasing office equipment on account results in following journal entry.

Office Equipment (Debit)

Payable (Credit)

Above entry increases assets and liabilities. Above entry does not impact stockholders' equity. Following is the equation of stockholders' equity

Stockholders equity = Assets - liabilities.