Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 29 - No. 40)
What is the effect on the accounting equation when a business pays off a portion of its accounts payable?
Assets increase, liabilities increase.
Assets decrease, liabilities increase.
Assets decrease, liabilities decrease.
Assets increase, equity increases.
Explanation
Cash (an asset) decreases and Accounts Payable (a liability) decreases.
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