Choose the best answer.
Carl Cornfield purchases new equipment. After reducing the cash line, where else would Carl put an entry for this purchase?
To determine where Carl would put an entry for the purchase of new equipment, we need to consider the accounting equation, which states that Assets = Liabilities + Equity.
When Carl reduces the cash line, it means that the cash account decreases. As a result, the asset side of the equation decreases.
To balance the equation, Carl would need to increase either the liabilities or equity side. Since this is a purchase of new equipment, it is likely that Carl would increase the equipment account, which falls under the assets category.
Therefore, the entry for this purchase would be to debit (increase) the equipment account and credit (decrease) the cash account, reflecting the decrease in cash due to the purchase and the increase in equipment.
Hence, the best answer is: Increase the equipment account.