A Company Purchases a High-Speed Packaging Machine for $100,000

question 29

Multiple Choice

A company purchases a high-speed packaging machine for $100,000. The correct entry for the purchase of Equipment in the fundamental accounting equation is

• A) An increase on the left side
• B) A decrease on the left side
• C) An increase on the right side
• D) A decrease on the right side
• E) Neither side increases or decreases

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Definitions:

Land

Land is considered a fixed asset or real property, not depreciable under accounting rules, used by businesses for operations or investment.

Cash Inflow

Money received by a business from various sources including sales, investments, financing, and more.

Indirect Method

A method of preparing a statement of cash flows in which net income is adjusted for items that do not affect cash, to determine net cash provided by operating activities.

Accounts Receivable

Amounts owed to a business by its customers for goods or services that have been delivered or used but not yet paid for.