When a payment is made on an account payable:

Question

Quizplus · Accepted Answer

When a payment is made on an account payable, both the asset (cash) and liability (accounts payable) decrease. This reduces both the assets and liabilities in the balance sheet, without affecting stockholders' equity. Therefore, option B is the best choice. Option A is incorrect because it implies that stockholders' equity is affected, which is not the case. Option C is incorrect because it combines a liability with a revenue, which are two different categories in the financial statements. Option D is incorrect because it combines an asset with an expense, which are also two different categories.

When a Payment Is Made on an Account Payable