Baby Beach Company experienced an event that had the following effects on its financial statements.
-Which of the following events could have caused these effects?
A) Paid cash to settle accrued interest payable
B) Paid cash to settle the principal balance of note payable
C) Issued a note payable for cash
D) Paid cash to acquire a long-term asset

Question

Baby Beach Company experienced an event that had the following effects on its financial statements.  
-Which of the following events could have caused these effects?
A) Paid cash to settle accrued interest payable 
B) Paid cash to settle the principal balance of note payable 
C) Issued a note payable for cash 
D) Paid cash to acquire a long-term asset

Quizplus · Accepted Answer

Paying cash to settle accrued interest payable would decrease both cash and liabilities, which aligns with the effects described.

Baby Beach Company Experienced an Event That Had the Following