Question

Noodlecake purchases and receives $10,000 in computers, printers and desks in exchange for its promise to pay next month. what is the effect of this purchase on account on the accounting equation?

Answer 1

Based on the fact that Noodlecake purchases and receives $10,000 in computers and the like but will only pay next month, the effect on the accounting equation is:

• Increased total assets.
• Increased liabilities

What happens to the accounting equation?

The accounting equation is:

Assets = Equity + Liabilities

When computers, printers, and desks were purchased by Noodlecake, these will go to Assets as either fixed assets or inventory. Assets will therefore increase.

Liabilities will increase as well to cater for the fact that Noodlecake will only pay for the items in the following month.

Find out more on the accounting equation at brainly.com/question/24401217

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