Bell Company purchased supplies for $700 cash. Which of the following statements

Question

Bell Company purchased supplies for $700 cash. Which of the following statements correctly show the effect of this transaction on the accounting equation?

1. Assets will increase by $700, liabilities will remain unchanged, and stockholders' equity will increase by $700

2. Assets will increase by $700, stockholders' equity will remain unchanged, and liabilities will increase by $700

3. Assets remain unchanged, liabilities remain unchanged, and stockholders' equity will remain unchanged

4. Assets will remain unchanged, liabilities will increase by $700, and stockholders' equity will remain unchanged

Explanation / Answer

3. Assets remain unchanged, liabilities remain unchanged, and stockholders' equity will remain unchanged.

Option 3 is correct.

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