Cash payment on accounts payable will _____.
A)increase assets and liabilities
B)increase liabilities and decrease stockholders' equity
C)decrease assets and decrease liabilities
D)have no effect on the accounting equation

Question

Quizplus · Accepted Answer

Cash payment on accounts payable will decrease assets and decrease liabilities. When you pay off a liability (accounts payable), it reduces your assets (cash) and liabilities simultaneously, resulting in no overall effect on the accounting equation. Therefore, option C is the correct answer.

Cash Payment on Accounts Payable Will _____