On May 4, a retail firm pays a rent of $1,500 for the month of April. Which of the following is true when this transaction is recorded in a cash payment journal?

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When the retail firm pays rent of $1,500, it is recorded as a cash outflow. This decreases the asset account (Cash) by $1,500. At the same time, it decreases the equity account (Retained Earnings) since the company's net income for the month is reduced by the rent expense. Therefore, both assets and equity will decrease by $1,500.

On May 4, a Retail Firm Pays a Rent of $1,500