Question

Norman Company had a transaction that increased its assets by $5,000 and increased its liabilities by $5,000. This transaction could have been a(n) a. payment for a one-year insurance policy that will expire next year. b. purchase of office equipment for cash. c. purchase of supplies for on account. d. payment of a dividend. e. investment of cash into the business by the stockholders.

Answer 1

Answer:

The answer is: C) purchase of supplies for on account.

Explanation:

When Norman Company bought office supplies it will record them as supplies on hand, which are a type of current asset.

When you buy things on account, it means that you will pay the purchase at a later date, so a liability must be recorded.