How Does the Purchase of Equipment by Signing a Note

question 2

Multiple Choice

How does the purchase of equipment by signing a note affect the accounting equation?

• A) assets increase; assets decrease
• B) assets increase; liabilities decrease
• C) assets increase; liabilities increase
• D) assets increase; owner's equity increases

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Definitions:

Dissociates

In a legal context, refers to a partner's withdrawal or a member's departure from a partnership or an association, affecting the entity's composition.

Novation Agreement

A legal contract that creates a new obligation to replace an existing one, with the agreement of all parties involved.

Statement of Dissociation

A formal declaration that a partner is no longer associated with a partnership's activities.

Limited Liability Partnership

A business structure that protects its partners from personal liability for certain partnership debts and obligations.