Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 45 - No. 16)
What is the impact on the accounting equation when a company pays salaries to its employees in cash?
Assets increase, liabilities increase.
Assets decrease, liabilities increase.
Assets decrease, equity decreases.
Assets increase, equity increases.
Explanation
Cash (an asset) decreases, and Salaries Expense (which reduces equity) increases.
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