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?
A) Assets decrease; owner's equity decreases.
B) Liabilities increase; owner's equity decreases.
C) Assets increase; liabilities increase.
D) Liabilities increase; owner's equity increases.

Question

Quizplus · Accepted Answer

When the business receives the bill from its supplier, it incurs a liability (accounts payable) which increases the liabilities side of the accounting equation. This decrease in owner's equity as a result of an increase in liabilities.

A Business Receives a Bill for Services Rendered from One