The accounting equation for Ying Company shows a decrease in its assets and a decrease in its equity.Which of the following transactions could have caused that effect?
A)Cash was received from providing services to a customer.
B)The company paid an amount due on credit.
C)Equipment was purchased for cash.
D)A utility bill was received for the current month,to be paid in the following month.
E)Advertising expense for the month was paid in cash.

Question

Quizplus · Accepted Answer

When advertising expense is paid in cash, it decreases assets (cash) and decreases equity (retained earnings) due to the expense.

The Accounting Equation for Ying Company Shows a Decrease in Its