Assume a firm has paid an invoice for merchandise it purchased earlier and the appropriate data have been entered in the cash disbursements transaction file. Data from the cash disbursements transaction file have been transferred to the general journal transaction file. What is the result if a trial balance is prepared at this point?
A) Accounts payable shows a decrease, and cash shows an increase
B) Accounts payable shows no change and cash shows no change
C) Accounts payable shows a decrease, and cash shows a decrease
D) Accounts payable shows an increase, and cash shows an increase

Question

Quizplus · Accepted Answer

When a firm pays an invoice for merchandise it purchased earlier, the payment results in a decrease in Accounts Payable (since the liability to the supplier is reduced) and a decrease in Cash (since cash is used to settle the invoice).

Assume a Firm Has Paid an Invoice for Merchandise It