Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 44 - No. 45)
What is the primary impact on the accounting equation when a business pays its rent?
Assets increase and liabilities increase.
Assets decrease and liabilities increase.
Assets decrease and equity decreases.
Assets increase and equity increases.
Explanation
Paying rent involves a decrease in cash (an asset) and an expense (which decreases equity).
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