A decrease in liabilities will reduce a firm's accounting profit.

Name: A decrease in liabilities will reduce a firm's accounting profit.
Brand: Quizplus
Rating: 4.7 (57 reviews)

Question

Quizplus · Accepted Answer

A decrease in liabilities would not directly affect the firm's revenue or expenses, therefore it would not directly affect the accounting profit. However, a decrease in liabilities could indirectly affect the accounting profit if it is associated with a decrease in interest expense or other related expenses.

A Decrease in Liabilities Will Reduce a Firm's Accounting Profit