Question

Accord Company purchased land for​ $100,000 by making a cash payment of​ $30,000 and promising to pay the remaining amount in a later accounting period. What is the net effect of this transaction on​ Accord's accounting​ equation?

Answer 1

Answer:

Assets and liabilities both will increase by $70,000.

Explanation:

Given data provided

Purchase land = $100,000

Cash payment = $30,000

The computation of net effect is shown below:-

= Purchase land - Cash payment

= $100,000 - $30,000

= $70,000

Therefore, for computing the net effect we simply deduct cash payment from purchase land. So, Assets and liabilities both will increase by $70,000.