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22 January, 12:51

A company purchases $10,000 worth of equipment on account. What effect does this transaction have on the equity account?

A. Increases

B. Decreases

C. No effect.

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Answers (1)
  1. 22 January, 13:14
    0
    No effect (C)

    Explanation:

    The purchase of an equipment on account has no effect on the equity account because purchasing equipment on account is a method of payment therefore it causes an increase in the asset of the company because equipment purchased is an asset acquired

    equity accounts are made up of payments/investment money put into a business by the ownership of the business or it can come in form of residual income made from investment/business made on behalf of the company by its ownership types of such equity accounts are: preferred stocks, common stock, contributed surplus, treasury stock.

    purchase of equipment will positively increase the assets account of the company.
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Home » Business » A company purchases $10,000 worth of equipment on account. What effect does this transaction have on the equity account? A. Increases B. Decreases C. No effect.
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