Payment Is Made for Machinery Purchased Previously on Credit

question 40

Multiple Choice

Payment is made for machinery purchased previously on credit. What effect does this transaction have on the accounting equation?

• A) Assets and liabilities increase
• B) Assets and contributed capital increase
• C) Liabilities decrease and retained earnings increase
• D) Assets and liabilities decrease

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Definitions:

Medicare

A federal health insurance program in the United States primarily for people 65 years of age and older, as well as for some younger individuals with disabilities.

Medicaid

A government-funded program in the United States that provides health coverage to eligible low-income adults, children, pregnant women, elderly adults, and people with disabilities.

Health Insurance

A type of insurance coverage that pays for medical and surgical expenses incurred by the insured or reimburses the insured for expenses incurred from illness or injury.

Terminally Ill

A medical condition that is severe and incurable, leading inevitably to death, often involving significant pain and suffering.