Land Is Purchased by the Business for $100,000

question 149

Multiple Choice

Land is purchased by the business for $100,000.The company pays for land with a $20,000 cash payment and the execution of an $80,000 promissory note payable to the seller.How does this purchase affect the business's accounting equation?

• A) Assets increase $80,000; liabilities decrease $20,000.
• B) Assets increase $20,000; liabilities decrease $80,000.
• C) Assets increase $80,000; owner's equity increases $80,000.
• D) Assets increase $80,000; liabilities increase $80,000.

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Definitions:

Equivalent Single Discount

A method used in accounting to consolidate multiple trade discounts into one single discount, simplifying the calculation process.

Discount Date

The specified date by which a payment can be made at a reduced rate or a debt settled to avail a discount.

Due Date

The due date is the specified day when a payment, task, or submission is required to be completed or paid.

Remittance

The act of sending money in payment or as a gift.