Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 13 - No. 16)
What is the effect on the accounting equation when a business pays its suppliers in cash?
Assets increase, liabilities increase.
Assets decrease, liabilities decrease.
Assets increase, liabilities decrease.
Assets decrease, owner's equity increases.
Explanation
Assets (cash) decrease, and liabilities (accounts payable) decrease.
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