Which of the Following Would Result If a Business Purchased

question 161

Multiple Choice

Which of the following would result if a business purchased Equipment paying a 50% down payment in cash?

• A) Equipment would increase and Cash would decrease.
• B) Accounts Payable would increase.
• C) Since the equipment has not been paid in full, there is nothing to record.
• D) Both A and B are correct.

---

Definitions:

Income Statement

A financial statement showing a company's revenue and expenses, indicating the net profit or loss over a specific period.

Fixed Manufacturing Overhead

Costs associated with manufacturing that do not vary with the level of production, such as salaries of managers and depreciation of equipment.

Direct Labor

The cost associated with employees who directly contribute to the manufacturing or production of goods, redefined as the labor directly tied to the creation of a product.

Raw Material

The basic materials and substances that are used in the production of goods, typically transformed through manufacturing processes.