For the following transaction, identify the type of change that would have occurred in the accounting equation: Assets = Liabilities + Share capital + Opening retained profits + Revenue - Expenses - Dividends
A payment was made to accounts payable.
A) A liability increased and another liability decreased.
B) An asset decreased and a liability decreased.
C) An asset increased and revenue increased.
D) An asset decreased and an expense increased.

Question

Quizplus · Accepted Answer

When a payment is made to accounts payable, it means that the company has reduced its liabilities (accounts payable) by paying off a portion of it, resulting in a decrease in assets (cash or bank account) as well. Therefore, the accounting equation would be: Assets = Liabilities + Share capital + Opening retained profits + Revenue - Expenses - Dividends - Accounts payable.

For the Following Transaction, Identify the Type of Change That