if a business purchases equipment for $4,000 cash, what is the effect on the accounting equation?\nassets…

if a business purchases equipment for $4,000 cash, what is the effect on the accounting equation?\nassets increase $4,000; liabilities increase $4,000\nassets increase $4,000; owners equity decreases $4,000\none asset increases $4,000, another asset decreases $4,000\nassets decrease $4,000; liabilities decrease $4,000

if a business purchases equipment for $4,000 cash, what is the effect on the accounting equation?\nassets increase $4,000; liabilities increase $4,000\nassets increase $4,000; owners equity decreases $4,000\none asset increases $4,000, another asset decreases $4,000\nassets decrease $4,000; liabilities decrease $4,000

Answer

Explanation:

Step1: Recall accounting - equation components

The accounting equation is Assets = Liabilities + Owner's Equity. Cash and equipment are both assets.

Step2: Analyze the transaction

When a business purchases equipment for $4,000 cash, the equipment (an asset) increases by $4,000 and cash (an asset) decreases by $4,000.

Answer:

One asset increases $4,000, another asset decreases $4,000