Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 26 - No. 16)

What is the effect on the accounting equation when a company pays its employees' salaries?

Assets increase, Equity increases

Assets increase, Liabilities increase

Assets decrease, Equity decreases

Assets decrease, Liabilities decrease

Explanation

Paying salaries decreases cash (an asset) and decreases retained earnings (reducing equity) through Salaries Expense. The liability has decreased as well.

Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 26 - No. 16)

Explanation

Comments (0)