In part,a transaction affects the accounting equation by decreasing a liability.There is no effect on assets.Which of the following statements is correct with regards to this transaction?
A)If other liabilities are unchanged,stockholders' equity must be decreasing.
B)If other liabilities are unchanged,stockholders' equity must be increasing.
C)If stockholders' equity is unchanged,another liability must be decreasing.
D)If stockholders' equity is unchanged,other liabilities must be unchanged.

Question

Quizplus · Accepted Answer

Change in assets = change in liabilities + change in stockholders' equity.If liabilities decrease and there is no change in assets,then either another liability must increase or stockholders' equity must increase.

In Part,a Transaction Affects the Accounting Equation by Decreasing a Liability.There