When an account payable is paid with cash, the stockholders' equity in the business decreases.

Question

Quizplus · Accepted Answer

When an account payable is paid with cash, there is no impact on stockholders' equity in the business. Stockholders' equity represents the residual value of assets after liabilities are deducted, and cash is simply an asset being used to settle a liability. Therefore, the payment of an account payable with cash has no effect on the equity of the business.

When an Account Payable Is Paid with Cash, the Stockholders