Machinery Is Purchased on Credit

question 119

Multiple Choice

Machinery is purchased on credit. What effect does this transaction have on the accounting equation?

• A)Assets and liabilities increase.
• B)Assets and stockholders' equity increase.
• C)Liabilities increase and stockholders' equity decreases.
• D)Assets and liabilities decrease.

---

Definitions:

Output

The complete sum of products or services generated by an individual, device, company, or economic system.

Total Surplus

The aggregate benefit to society, represented by the consumer and producer surplus, from the consumption and production of a good or service.

Value to Buyers

The perceived benefit or satisfaction that consumers derive from purchasing and consuming a product or service, influencing their willingness to pay.

Costs to Sellers

The expenses incurred by sellers in producing and selling a product, which can include materials, labor, and overhead.