Question

Purchasing land with cash would have what effect on the accounting equation?

a.No effect.
b.Total assets decrease.
c.Total assets increase.
d.Total liabilities increase.

Answer 1

Purchasing land with cash would increase total assets in the accounting equation.

Step-by-step explanation:

Purchasing land with cash would increase total assets in the accounting equation.

In the accounting equation, the left side represents the assets, and the right side represents the liabilities and equity. When land is purchased with cash, it increases the asset side of the equation.

This is because land is considered a long-term asset and its purchase would increase the total assets of the business.