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Recording of Transactions - 1 — Account STD 11 Commerce — Question

CBSE BoardEnglish MediumSTD 11 CommerceAccountRecording of Transactions - 11 Mark
MCQ
Purchase of office equipment for cash would cause __________.
  • ✓
    Cash in hand to decrease
  • B
    External liability to decrease
  • C
    Total liabilities to increase
  • D
    Total assets to increase
✓

Answer

Correct option: A.
Cash in hand to decrease
Cash exists as a company's most liquid asset. Purchasing office equipment for cash will reduce a company's assets (i.e. reduction in cash in hand).
Since owner's equity equals assets minus liabilities, owner's equity will be reduced as a result of buying office equipment with cash.

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