An employee worked for a small business during the current month but will not be paid until the next month.If the business uses cash accounting, what would be the effect on the accounting equation in the current month?
A)Assets decrease and liabilities decrease.
B)Liabilities increase and owners' equity increases.
C)Liabilities increase and owners' equity decreases.
D)There is no effect at this time.

Question

Quizplus · Accepted Answer

With cash accounting, the transaction is only recorded when cash is received or paid, so there is no effect on the accounting equation in the current month.

An Employee Worked for a Small Business During the Current