If a business pays $1,100 on account to a creditor,the effect of the payment is a decrease to cash and a(n)
A) decrease to Fees Income.
B) increase of capital.
C) increase to accounts receivable.
D) decrease to accounts payable.

Question

Quizplus · Accepted Answer

When a business pays $1,100 on account to a creditor, it means that they are paying off a liability. The liability account that is most likely affected by this payment is accounts payable. Therefore, the effect of the payment is a decrease to cash (asset) and a decrease to accounts payable (liability).

If a Business Pays $1,100 on Account to a Creditor,the