A business paid $7,000 to a creditor in payment of an amount owed. The effect of the transaction on the accounting equation was to
A) increase an asset, decrease another asset
B) decrease an asset, decrease a liability
C) increase an asset, increase a liability
D) increase an asset, increase stockholders' equity

Question

Quizplus · Accepted Answer

Assets = Liabilities + Stockholders' Equity
Asset (Cash) decreases by $7,000.
Liability (Accounts Payable) decreases by $7,000.

A Business Paid $7,000 to a Creditor in Payment of an Amount