Purchase of machinery for cash:Question 3Answera.Increases total assetsb.Increases assets and liabilitiesc.Keeps total assets unchangedd.Decreases total assets

The correct answer is c. Keeps total assets unchanged.

Here's why:

When a company purchases machinery for cash, it is essentially converting one type of asset (cash) into another type (machinery). The cash account decreases while the machinery (or equipment) account increases.

The total amount of assets before and after the transaction remains the same, assuming the purchase doesn't result in any immediate depreciation or other adjustments. Therefore, the purchase of machinery for cash keeps total assets unchanged.

Liabilities are not affected by this transaction as no borrowing or credit is involved. Hence, options a, b, and d are incorrect.