Question

a jewelry store called flower company, buys gold on account from a local gold supplier. Which...

a jewelry store called flower company, buys gold on account from a local gold supplier. Which effect will the transaction have on flower's financial statements?

A.Total Assets increase

B.Total Liabilities increase

C.Stockholders Equity decreases

D.Total Assets decrease

E.Net Income decreases

Business   Accounting   
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Answer #1
Solution:
Jewellary store buys gold it means inventory is increases so assets will increaes
Jewellary is buys on credit basis it means liablity will also increases
Journal entry of the same is as below,
Account Title Debit Credit
Inventory XXXXX
       Account Payable XXXXX
Answer =
Option A = Total Assets increase
Option B = Total Liabilities Increase
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