Purchasing supplies on account increases liabilities and decreases equity.

Purchasing Supplies

The process of acquiring the goods and materials a company needs to operate.

Increases Liabilities

Refers to events or transactions that result in a rise in the amounts owed by a company, such as taking on new loans or issuing bonds.

Decreases Equity

Activities or transactions that reduce the owner's equity in a company, often through expenses, losses, or distributions to owners.