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    Balance sheet treatment - cash /credit purchase

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    Compare and contrast the balance sheet treatment of a car purchased by cash and a car purchased on credit. How is equilibrium of the basic accounting equation maintained in both instances? Clarify why the two different methods of purchase might be treated differently?

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    Compare and contrast the balance sheet treatment of a car purchased by cash and a car purchased on credit. How is equilibrium of the basic accounting equation maintained in both instances? Clarify why the two different methods of purchase might be treated differently?

    1. Car Purchased by cash
    In this case the fixed assets (vehicle) will increase by the cost of the car and current assets ...

    Solution Summary

    The solution explains the impact on balance sheet given whether the purchase in made by cash or on credit

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