Question

Purchasing office supplies on account will: Multiple Choice Not change assets. Increase assets and decrease liabilities. Increase assets and increase liabilities. Increase assets and increase stockholders' equity.

Answer 1

The correct option is C - Increase assets and increase liabilities

Explanation:

When anorganization purchases office supplies on account then it becomes essential to record such supplies as supplies on hand. Generally, in a business organization, the supllies on hand are used up within the span period of one year which means that they are to be recorded as current asset in the financial statement ( balance sheet). As no cash has been paid to merchandise, so it increases the liabilities also.

Therefore, it will increase the current assets and current liabilities.