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Which of the following is the immediate effect on the accounting equation when a business completes a purchase order for more inventory at a cost of $1500?
Which of the following is the immediate effect on the accounting equation when a business completes a purchase order for more inventory at a cost of $1500?
- A) Decrease the asset cash by $1500 and increase expenses by $1500.
- C) Increase liabilities by $1500 and increase asset inventory by $1500.
- B) Increase asset inventory by $1500 and decrease the asset cash by $1500. (correct)
- D) No effect — this is not recognized as a business transaction until the inventory is received.
What is the effect on the asset cash and expenses when a business completes a purchase order for more inventory at a cost of $1500?
What is the effect on the asset cash and expenses when a business completes a purchase order for more inventory at a cost of $1500?
- D) No effect — this is not recognized as a business transaction until the inventory is received.
- A) Decrease the asset cash by $1500 and increase expenses by $1500. (correct)
- C) Increase liabilities by $1500 and increase asset inventory by $1500.
- B) Increase asset inventory by $1500 and decrease the asset cash by $1500.
When is a purchase order for more inventory recognized as a business transaction?
When is a purchase order for more inventory recognized as a business transaction?
- C) When the cost of the inventory is known.
- B) When the inventory is received. (correct)
- D) When the inventory is sold.
- A) When the purchase order is completed.