Saturn, Inc. paid $13,000 on accounts payable. How does this transaction affect the accounting equation of Saturn?
A) Assets decrease by $13,000 and equity increases by $13,000.
B) Assets decrease by $13,000 and liabilities decrease by $13,000.
C) Assets increase by $13,000 and equity decreases by $13,000.
D) Assets increase by $13,000 and liabilities increase by $13,000.

Question

Quizplus · Accepted Answer

When Saturn, Inc. pays $13,000 on accounts payable, it decreases its liabilities by $13,000. This would be reflected in the accounting equation as a decrease in liabilities and no change to assets or equity. Therefore, the best choice is B, where assets decrease by $13,000 and liabilities decrease by $13,000.