A business receives a bill for services rendered from one of its suppliers. The business will pay the supplier next month. When the business receives the bill from its supplier, how does this affect the accounting equation?

Question

Quizplus · Accepted Answer

When the business receives a bill, it incurs a liability (accounts payable) which increases liabilities. Since the expense reduces net income, it also decreases owners' equity.

A Business Receives a Bill for Services Rendered from One