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
An account was paid for stationery purchased in the previous accounting period.
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

The payment for stationery would result in a decrease in the asset account (stationery) and a decrease in the liability account (accounts payable). This is reflected in the accounting equation as a decrease in assets and a decrease in liabilities, which is represented by choice B.

For the Following Transaction, Identify the Type of Change That