If a company purchases equipment costing $5,800 on credit, the effect on the accounting equation would be:

Assets increase $5,800 and liabilities decrease $5,800.

Equity decreases $5,800 and liabilities increase $5,800.

Liabilities decrease $5,800 and assets increase $5,800.

Assets increase $5,800 and liabilities increase $5,800.

Equity increases $5,800 and liabilities decrease $5,800.