The Effect on the Accounting Equation of the Business Buying

question 22

Multiple Choice

The effect on the accounting equation of the business buying a computer worth $900 paying $450 cash and owing $450 to be paid in 30 days' time is:.

• A)increase the asset computers,increase the asset cash,decrease the liability accounts payable
• B)decrease the asset computers,increase the asset cash,decrease the liability accounts payable
• C)increase the asset computers,decrease the asset cash,increase the liability accounts payable
• D)increase the asset computers,increase the asset cash,decrease the liability accounts payable.

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Definitions:

Equation of Exchange

An economic equation that describes the relationship between the money supply, velocity of money, price level, and an economy's output.

GDP Rise

An increase in the Gross Domestic Product, indicating growth in the economy and the production of goods and services.

Velocity

In economic terms, the rate at which money is exchanged from one transaction to another and how much a unit of currency is used in a given period.

Money Supply

Money Supply refers to the total amount of monetary assets available in an economy at any specific time, including cash, coins, and balances held in checking and savings accounts.