Question

A company purchases supplies on account for $2,200. Indicate the amount of increases and decreases in the accounting equation.

Answer 1

Assets increase by $2200: liabilities increase by $2200

Step-by-step explanation:

The accounting equation is expressed as below.

Assets = Owners Equity + Liabilities.

Making purchases on account means buying on credit. Purchasing Supplies on credit will increases the debts( liabilities) of the company by $2200.

Supplies will belong to the business; hence assets will increase by $2200