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This liability is increasing, as the company now owes money to the supplier. Accounts Payable is used to recognize this liability.
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This creates a liability for Printing Plus, who owes the supplier money for the equipment. Lynn asked to be sent a bill for payment at a future date. The company did not pay for the equipment immediately.Assets increase on the debit side therefore, the Equipment account would show a $3,500 debit.
#T account debit credit plus
It increases because Printing Plus now has more equipment than it did before. In this case, equipment is an asset that is increasing.Transaction 2: On January 5, 2019, purchases equipment on account for $3,500, payment due within the month. There is no effect on the income statement from this transaction as there were no revenues or expenses recorded.
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With both totals increasing by $20,000, the accounting equation, and therefore our balance sheet, will be in balance. You will see total assets increase and total stockholders’ equity will also increase, both by $20,000. Impact on the financial statements: Both of these accounts are balance sheet accounts. Looking at the expanded accounting equation, we see that Common Stock increases on the credit side. The common stock account is increasing and affects equity.