Venus Inc. paid $5,000 for account payable. How does this transaction affect the accounting equation of Venus?

Question

Quizplus · Accepted Answer

When Venus Inc. pays $5,000 for an account payable, both sides of the accounting equation are affected. The asset account decreases by $5,000 as cash is paid out, and the liability account also decreases by $5,000 as the debt is settled. Therefore, the accounting equation remains balanced. However, equity does not change in this transaction.

Venus Inc Paid $5,000 for Account Payable