When a liability is paid, which of the following is true?
A) Total assets and total liabilities remain the same.
B) Total assets and total owners' equity decrease.
C) Total assets decrease by the same amount that total liabilities increase.
D) Total assets and total liabilities decrease.

Question

Quizplus · Accepted Answer

When a liability is paid, cash is used to settle the obligation. This results in a decrease in both total assets and total liabilities. Total owners' equity is not affected by the payment of a liability.

When a Liability Is Paid, Which of the Following Is