Purchased Supplies On Account Effect On Assets
Purchased supplies on account effect on Assets is that these are increased after the purchase. So, we debit supplies account and credit Accounts Payable Account and hence as a result total assets on asset side on the Balance Sheet increase. Similarly, liabilities & equity side also increases with the same amount but both sides of Balance sheet remain same in total monetary value.
It also means that both asset and Liabilities & Equity sides of the Accounting Equation increase with the same amount but the total of both sides remain the same.
Let’s us take an example of purchased office supplies on account Rs. 5000 from Mr. A and its effect on accounting equation.
Purchased Supplies On Account Debit Or Credit
Office Supplies a/c 5000
Mr. A 5000
(Office Supplies Purchased On Account)
The above entry clearly shows that supplies account is debited when it is increasing when we purchased it according to the Rules Of Debit And Credit.
Accounting Equation is given below:
Assets = Liabilities + Owner’s Equity
50000 = 10000 + 40000
+5000 = +5000 + ---
55000 = 15000 + 40000
Both sides increased by Rs. 5000 but the total of both sides remain the same at Rs. 55000.
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