Payment Is Made for Machinery Purchases Previously on Credit

question 141

Multiple Choice

Payment is made for machinery purchases previously on credit. What effect does this transaction have on the accounting equation?

• A)Assets and liabilities increase.
• B)Assets and contributed capital increase.
• C)Liabilities decrease and retained earnings increase.
• D)Assets and liabilities decrease.

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Definitions:

Labor Hire

The process of employing workers, often on a temporary basis, to perform certain jobs or tasks.

Marginal Productivity

is the additional output resulting from using one more unit of a particular input, holding all other inputs constant.

Hourly Wage

The rate of pay employees receive for one hour of work, an important indicator of labor costs and worker compensation in an economy.

Marginal Resource Cost

The change in total cost that comes from producing one additional unit of a good or service.