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A business buys office equipment by issuing a one-year note payable. How is this recorded?

  1. A Debit asset, credit equity
  2. B Debit liability, credit asset
  3. C Debit asset, credit liability
  4. D Debit equity, credit asset
Answer

Debit asset, credit liability

The equipment increases assets (debit) and the note payable increases liabilities (credit). No cash and no equity is involved at the point of purchase.

All Accounting MCQs

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