Business FinancesQuestion 1224 of 1605
A contractor records a $50,000 equipment purchase. On the balance sheet this transaction:
a.Increases net profit by $50,000
b.Converts one asset (cash) into another asset (equipment), keeping total assets the same if paid in cash
c.Is recorded as revenue
d.Reduces owner's equity by $50,000
Explanation
Buying equipment for cash exchanges one asset for another: cash decreases and equipment increases by the same amount, so total assets are unchanged. It is not revenue or an expense at purchase; the cost is expensed over time through depreciation.
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