Celery Company Has Assets of $150,000, Liabilities of $90,000, and Equity

question 149

Multiple Choice

Celery Company has assets of $150,000, liabilities of $90,000, and equity of $60,000. Itbuys supplies for cash $5,000. What effect would this transaction have on the accounting equation?

• A)Assets, no effect, liabilities, no effect.
• B)Assets, $5,000 increase, equity, $5,000 decrease.
• C)Assets, $5,000 increase, equity, $5,000 increase.
• D)Assets, $5,000 decrease, equity, $5,000 decrease.
• E)Liabilities, $5,000 increase, equity, $5,000 decrease.

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Definitions:

Payee

The individual or entity to whom a payment is to be made.

Drawee

A drawee is the party in a transaction, usually a bank, upon whom a check or draft is drawn and is responsible for paying the specified amount.

Time-certain Requirement

A provision in a contract or agreement that specifies a precise time by which an obligation must be fulfilled.

Constructive Conflict

refers to conflict that, when managed well, results in productive disagreement, leading to creative solutions and improvements without personal attacks.