A cash payment on accounts payable will ________.
A) increase assets and increase liabilities
B) increase assets and increase stockholders' equity
C) decrease assets and decrease liabilities
D) decrease assets and increase stockholders' equity

Question

Quizplus · Accepted Answer

When making a cash payment on accounts payable, assets (cash) are decreased and liabilities (accounts payable) are also decreased. This is because the payment reduces the amount owed to the creditor, which is a portion of the liabilities. This transaction does not affect stockholders' equity, so options B and D can be eliminated. Option A is incorrect because it would imply that the payment increases both assets and liabilities, which is not possible in a single transaction.

A Cash Payment on Accounts Payable Will ________