The accounting equation is: Assets = Liabilities + Owner's Equity.

When a business pays off its accounts payable:

Step 1: Identify the accounts involved. In this case, the accounts involved are Cash (an asset account) and Accounts Payable (a liability account).

Step 2: Determine the effect on the accounts. Paying off an account payable decreases the liability of the business. Since the business is using cash to pay off the liability, the cash account (an asset) also decreases.

Step 3: Apply the effects to the accounting equation.

- Assets decrease because cash (an asset) decreases by $5,000.
- Liabilities decrease because accounts payable (a liability) decreases by $5,000.

So, the accounting equation after the transaction would still be balanced as both assets and liabilities decrease by the same amount. The decrease in assets is offset by the decrease in liabilities, keeping the equation in balance.

Question

The accounting equation is: Assets = Liabilities + Owner's Equity.

When a business pays off its accounts payable:

Step 1: Identify the accounts involved. In this case, the accounts involved are Cash (an asset account) and Accounts Payable (a liability account).

Step 2: Determine the effect on the accounts. Paying off an account payable decreases the liability of the business. Since the business is using cash to pay off the liability, the cash account (an asset) also decreases.

Step 3: Apply the effects to the accounting equation.

- Assets decrease because cash (an asset) decreases by $5,000.
- Liabilities decrease because accounts payable (a liability) decreases by $5,000.

So, the accounting equation after the transaction would still be balanced as both assets and liabilities decrease by the same amount. The decrease in assets is offset by the decrease in liabilities, keeping the equation in balance.

Knowee AI · Accepted Answer

The accounting equation is: Assets = Liabilities + Owner's Equity.

When a business pays off its accounts payable:

Step 1: Identify the accounts involved. In this case, the accounts involved are Cash (an asset account) and Accounts Payable (a liability account).

Step 2: Determine the effect on the accounts. Paying off an account payable decreases the liability of the business. Since the business is using cash to pay off the liability, the cash account (an asset) also decreases.

Step 3: Apply the effects to the accounting equation.

- Assets decrease because cash (an asset) decreases by $5,000.
- Liabilities decrease because accounts payable (a liability) decreases by $5,000.

So, the accounting equation after the transaction would still be balanced as both assets and liabilities decrease by the same amount. The decrease in assets is offset by the decrease in liabilities, keeping the equation in balance.

A $5 000 account payable is paid by the business. How is the accountingequation affected?

Question

A $5 000 account payable is paid by the business. How is the accounting equation affected?

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