A company purchases $10,000 worth of equipment on account. What effect does this transaction have on the equity account?

A. Increases

B. Decreases

C. No effect.

No effect (C)

Explanation:

The purchase of an equipment on account has no effect on the equity account because purchasing equipment on account is a method of payment therefore it causes an increase in the asset of the company because equipment purchased is an asset acquired

equity accounts are made up of payments/investment money put into a business by the ownership of the business or it can come in form of residual income made from investment/business made on behalf of the company by its ownership types of such equity accounts are: preferred stocks, common stock, contributed surplus, treasury stock.

purchase of equipment will positively increase the assets account of the company.