How Does the Purchase of Supplies on Account Affect the Accounting

question 106

Multiple Choice

How does the purchase of supplies on account affect the accounting equation?

• A)Assets increase;liabilities decrease
• B)Assets increase;owner's equity increases
• C)Assets increase;liabilities increase
• D)Liabilities increase;owner's equity decreases

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Definitions:

Production Possibilities Schedule

A table or graph that shows the various combinations of two goods or services that an economy can produce using all its resources efficiently.

Opportunity Costs

The loss of potential gain from other alternatives when one alternative is chosen; the value of the next best choice.

Financial Investment

The purchase of a financial asset (such as a stock, bond, or mutual fund) or real asset (such as a house, land, or factories) in the expectation of financial gain.