Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 19 - No. 6)
What is the impact of paying employee wages on the accounting equation?
Assets decrease, Liabilities increase
Assets increase, Liabilities decrease
Assets decrease, Equity decreases
Assets increase, Equity increases
Explanation
Paying wages decreases cash (asset) and decreases retained earnings (equity) because wages are an expense.
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