Paying the principal on a note plus interest would have which effect on the categories?
A)Total liabilities would be increased.
B)Total assets would be decreased.
C)Owner's equity would be decreased.
D)B and C could be correct.

Question

Quizplus · Accepted Answer

Paying the principal on a note decreases the liability (which is a decrease in total liabilities) but also decreases owner's equity (which is a decrease in total assets). Therefore, both B and C could be correct.

Paying the Principal on a Note Plus Interest Would Have