how will the fundemantal accounting equtation (assets=liabilities+owners equity) change if supplies are purchased on account? explain how tgis purchase will or will not change the owner's equity?
i thought maybe if the company buys 1000.00 on office supplies account it would increase the asset by 1000.00 and the liabilities would also increase by 1000.00, therefore the owner's equity would stay the same until the office account is paid for. Am i on the right track please help the queen thank you....
You are correct. Then, when paid for, the liabilities reduces by 1000 and owners equity increases by a like amount. As the supplies are used up, hopefully, the assets increases by at least that amount and owners equity inceases even more.
thank you bobpursley