A company paid cash for an amount owed to a creditor. This transaction decreased cash and:
A) decreased revenues.
B) decreased liabilities.
C) decreased expenses.
D) increased expenses.

Question

Quizplus · Accepted Answer

Since the company paid an amount owed to a creditor, this decreased a liability, thereby decreasing the total liabilities of the company. There is no impact on revenues or expenses as cash payment does not directly affect them.

A Company Paid Cash for an Amount Owed to a Creditor