Question

Which of the following will increase a company’s current liabilities? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.)

• A company purchases a new truck with cash.unchecked
• A company receives cash from taking out a long-term loan.unchecked
• A company collects half of its accounts receivable balance.unchecked
• A company purchases inventory on credit.unchecked
• A company purchases new manufacturing equipment with cash.unchecked

Answer 1

• A company purchases a new truck with cash.UNCHECK, as this is a cash transaction.

• A company receives cash from taking out a long-term loan. Uncheck, as this will increase long term liability.

• A company collects half of its accounts receivable balance. UNCHECK, as this will affect assets.

• A company purchases inventory on credit. CHECK, this will increase accounts payable (a current liability)

• A company purchases new manufacturing equipment with cash.UNCHECK, as it will affect assets only.