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    Accounting:Accounting equation,journal entries etc.

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    Compare and contrast the balance sheet treatment of a car purchased by cash and a car purchased on credit.

    a) How is equilibrium of the basic accounting equation maintained in both instances?
    b) Clarify why the two different methods of purchase might be treated differently.

    Please show journal entries reflecting the above transactions.

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    Solution Summary

    The problem set deal with issues in accounting:Understanding the accounting equation,preparing journal entires etc.