Squid Roe,Inc.paid $1,000 cash for janitorial services.The effect of this transaction on the accounting equation is:

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This transaction decreases Cash (an asset) by $1,000 and increases Expenses (an equity account) by $1,000. Since expenses reduce equity, total shareholders' equity decreases by $1,000 as well. Therefore, the accounting equation is: Assets = Liabilities + Shareholders' Equity - $1,000 = 0 + (Shareholders' Equity - $1,000) - $1,000 = Shareholders' Equity - $2,000. In choice B, Total shareholders' equity 11ea839b_8b81_0777_908c_c1cd4164602f_TB5475_00_TB5475_00 accurately reflects this decrease in equity.