[iggyswife]

Which of the following transactions will cause an increase in assets and an increase in
Liabilities?

A. Office supplies are purchased for cash.
B. John Klein invests an additional $2,000 in his business.
C. Merchandise inventory is purchased on credit.
D. Goods are sold to a customer on account.

[pready]

What do you think the answer is?

You need to think about the transaction and the accounts involved in each, and the one that affects both an asset and a liability is your answer.

[pready]

I am not here to do your homework for you. I am here to assist you, which is what I did. I told you how to figure out the answer to the question.

For your information, the accounts that are affected by each transaction is as follows:
A. Office Supplies and Cash, both of which are Assets, Currents Assets to be precise.
B. Cash and Owners Equity or Owners Capital.
C. Merchandise Inventory and Accounts Payable, a current asset and a current liability.
D. Merchandise Inventory, Cost of Goods Solds, Sales Revenue, and Accounts Receivable, which are 2 current assets, a revenue account, and an expense account.

See if you did what I suggested and analyzed the transactions, you would have been able to figure out that the correct answer is C because the transaction affects an asset Merchandise Inventory and a purchase is an increase and a liability Accounts Payable because a pruchase on account increases a liabilility.

You need to think what is the question,what information is provided, and how to sove the problem with the information provided.

If you cannot figure this question on your own, I do not think you will be able to pass your accounting class.