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:

Standard Costs

Predetermined costs for products or services, used for budgeting and measuring performance against actual costs.

Raw Materials

These are the basic substances in their natural, modified, or semi-processed state, used as an input to a production process for manufacturing.

Standard Costs

Predetermined or estimated costs used to compare against actual costs, serving as a benchmark for measuring financial performance.

Work in Process

Work in process refers to the materials and goods partially completed during the manufacturing process.