Joann's Gems and Jewels buys wholesale diamonds from Butch's Baubles. As Joann's bookkeeper, you record the invoice for payment at a later time.

What is the effect on Joann's accounting equation?

A Joann's assets would decrease and her liabilities would increase. Her equity would be unchanged.

Joann's assets and liabilities would increase. Her equity would be unchanged.

Equity would increase since Joann hasn't paid for the diamonds and she might use personal funds.

D Butch's assets would not change because inventory would decrease but accounts receivable would increase.