What Is the Effect on the Statement of Financial Position

question 14

Multiple Choice

What is the effect on the statement of financial position when the business buys inventory on credit?

• A)Increase asset inventory; increase liability creditor.
• B)Increase asset inventory; increase equity.
• C)Decrease asset inventory; decrease liability creditor.
• D)Decrease asset inventory; increase liability creditor.

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Definitions:

Annuity Contract

A financial product issued by an insurance company that offers fixed or variable payments to an individual, typically beginning at retirement.

Expected Return

The anticipated amount of profit or loss an investment is to generate over a specific time period.

SIMPLE Pension Plan

A retirement savings plan that allows employees and employers to contribute to individual retirement accounts (IRAs) setup for employees, typically suitable for small businesses.

Annual Contribution

The total amount of money contributed to a specific account or fund within a single fiscal year.