If a company paid off $100,000 of its accounts payable, the effect of this transaction as reflected in the accounting equation are:
A) Total assets and total liabilities decrease
B) Total assets and total liabilities increase
C) Both total assets, total liabilities and stockholders' equity are unchanged
D) Total assets decrease and total liabilities increase

Question

Quizplus · Accepted Answer

Paying off $100,000 of accounts payable decreases both total assets (as cash or another asset is used to pay the liability) and total liabilities (as the accounts payable is reduced by the payment).

If a Company Paid Off $100,000 of Its Accounts Payable