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Immediate Effects on the Accounting Equation Quiz

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Immediate Effects on the Accounting Equation Quiz

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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?

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?

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?

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.

Immediate Effects on the Accounting Equation Quiz

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Podcast

Questions and Answers

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?

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?

When is a purchase order for more inventory recognized as a business transaction?

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