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Transaction 3: Purchase of Office Supplies The e-learning agency buys stationery and other office supplies...

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Accounting

Transaction 3: Purchase of Office Supplies

The e-learning agency buys stationery and other office supplies that the company will use in the future, agreeing to pay $500 within 30 days. This transaction increases both the assets and liabilities of the business, as follows:

ASSETS LIABILITIES OWNERS EQUITY

Cash

+

Office Supplies

+

Land

Accounts Payable

+

Sheena Bright, Capital

Bal

?

10,000

?

?

=

?

?

?

?

?

Office supplies is an asset, not an expense, because the supplies can be used in the future. The liability created by this transaction is an Account payable. A payable is always a liability.

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