Question

if a company paid $38,000 of its accounts payable in cash, what was the effect on the accounting equation?

Answer 1

The effect on the accounting equation will be Liabilities and assets decrease.

In economic accounting, a liability is described because of the future sacrifices of monetary advantages that the entity is obliged to make to other entities due to past transactions or other beyond events.

A liability is something a person or company owes, commonly a sum of money. Liabilities are settled over the years via the switch of economic blessings which include cash, goods, or offerings.

There are three primary classifications for liabilities. they're current liabilities, long-term liabilities, and contingent liabilities. Contemporary and lengthy-time period liabilities are going to be the most commonplace ones which you see for your enterprise.

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