Problem 1. Please select the right answer and explain in a few words why:
In the buyer's records, the purchase of merchandise on account would:
a. Increase assets and increase liabilities.
b. Increase liabilities and increase paid-in capital.
c. Increase assets and increase expenses.
d. Have no effect on total assets.
Problem 2. A journal entry recording an accrual:
a. Results in a better matching of revenues and expenses.
b. Will most likely include a debit to a liability account.
c. Will involve a debit or credit to cash.
d. Will affect balance sheet accounts only.