Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 15 - No. 46)
What is the effect of an increase in accounts payable on the accounting equation?
Assets increase, Liabilities increase
Assets decrease, Liabilities decrease
Assets increase, Equity increases
No effect on the accounting equation
Explanation
An increase in accounts payable means the company owes more to its suppliers, which is an increase in liabilities.
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