Gce Model Questions Vol1 2020 Financial Accounting Question 46

Practice objective / multiple choice question 46 from the 2020 Gce Model Questions Vol1 Financial Accounting examination.

Gce Model Questions Vol1 2020 Financial Accounting Objective / Multiple Choice Easy Difficulty
Question 46 GCE_MODEL_QUESTIONS_VOL1 • 2020 • FINANCIAL_ACCOUNTING • objective

On 1 March, XYZ Ltd purchased inventory on credit for \(\text{₦}120{,}000\). Explain how this transaction affects the accounting equation and identify the accounts involved.

Answer Options

Correct Answer A. Assets increase by ₦120,000 (Inventory); Liabilities increase by ₦120,000 (Accounts Payable); Equity unchanged.
B. Assets increase by ₦120,000 (Inventory); Liabilities decrease by ₦120,000 (Accounts Payable); Equity unchanged.
C. Assets increase by ₦120,000 (Inventory); Equity increase by ₦120,000 (Retained Earnings); Liabilities unchanged.
D. Assets increase by ₦120,000 (Cash); Liabilities increase by ₦120,000 (Accounts Payable); Equity unchanged.
Correct Answer
A
Correct Option:
Assets increase by ₦120,000 (Inventory); Liabilities increase by ₦120,000 (Accounts Payable); Equity unchanged.

About This Question

This is Gce Model Questions Vol1 2020 Financial Accounting Question 46. It is one of the objective questions from the 2020 Gce Model Questions Vol1 Financial Accounting examination.

Difficulty level: Easy .

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