Retscan, Inc. has assets of $625,000, liabilities of $385,000, and equity of $240,000. It buys office equipment on credit for $125,000. The effects of this transaction include: Group of answer choices

a. Assets increase by $125,000 and liabilities increase by $125,000

Explanation:

The Office equipment bought are considered PPE which means they are fixed assets. Their acquisition will increase the assets held by the company by the value of the equipment, $125,000.

The equipment was however, bought on credit. This means that the company still owes the suppliers, payment for it which will see their liabilities increase by the same amount of $125,000.

cognitive overload: having a lot on your mind impairs decision-making and tends to result in the simplest, but not necessarily best, option being selected.

empathy gaps: overlooking how you might feel in a different situation can result in unnecessary purchases, such as overbuying when shopping for food on an empty stomach.

optimism and overconfidence: wearing rose-tinted glasses and having unrealistic expectations about the future can affect money management and leave you unprepared for a change in circumstance.

instant gratification: seeking instant gratification drives impulsive spending and can undermine long-term planning and savings.

harmful habits: automatic or mindless behaviour can amplify a poor financial decision as it becomes a recurring event.

social norms: we are heavily influenced by the actions of others; while this can be in certain circumstances, it also contributes to the pressure to keep up with the joneses through conspicuous consumption.