On September 30,MFP Co.paid employee salaries of $7,000,including $1,000 it owed to its employees last month.What are the effects of this transaction on the accounting equation?

Question

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This transaction results in a decrease in assets ($7,000 paid out reduces cash or bank balance), a decrease in liabilities (the $1,000 owed from last month is now paid off), and an increase in expenses (recognizing $7,000 in salary expenses).