how will the fundemantal accounting equtation (assets=liabilities+owners equity) change if supplies are purchased on account? explain how tgis purchase will or will not change the owner's equity?

i thought maybe if the company buys 1000.00 on office supplies account it would increase the asset by 1000.00 and the liabilities would also increase by 1000.00, therefore the owner's equity would stay the same until the office account is paid for. Am i on the right track please help the queen thank you....

You are on the right track. Let's break down the transaction and its impact on the fundamental accounting equation:

1. When supplies are purchased on account for $1000, it means that the company acquired supplies but did not make an immediate payment for them. This transaction has two aspects:

- Assets: The company will increase the asset account for office supplies by $1000. This means that the company now has $1000 worth of supplies, which is an increase in assets.

- Liabilities: On the other side of the equation, the company will increase the liabilities account by $1000, representing the amount owed to the supplier. This liability arises because the company has not yet paid for the supplies.

So, after the purchase on account, the equation becomes:

Assets = $1000
Liabilities = $1000
Owner's Equity = No change

2. Now, let's consider the impact on the owner's equity. Since there is no direct change in owner's equity, it remains the same. However, it is important to note that the purchase on account increases the liabilities, which are debts owed by the company.

Once the company pays for the office supplies (reducing the liabilities by $1000), the transaction will affect both the assets and owner's equity. The assets will decrease by $1000 (the supplies are no longer owned), and owner's equity will also decrease by the same amount (the purchase reduced the company's net worth).

In summary, purchasing supplies on account initially increases both assets and liabilities, but it does not directly affect owner's equity until the liability is settled by making the payment.