Partial Credit Purchase Impacts Accounting Equation

Steps:

• Transaction: Fixtures (asset) acquired for full price; half paid in cash, half on credit.
• Assets: Fixtures increase by full amount, cash decreases by half, resulting in net asset increase.
• Liabilities: Accounts payable increase by unpaid half.
• Equity: No revenue, expense, or owner action, so unchanged.

Why D is correct:

• Accounting equation (Assets = Liabilities + Equity) balances with net assets and liabilities each increasing by half the price, leaving equity unaffected.

Why the others are wrong:

• A: Assets increase net, not decrease.
• B: Liabilities increase, not decrease.
• C: Liabilities increase, not no effect.

Final answer: D