Sabrina Company recorded an adjusting entry for salaries owed to employees at the end of the year. As a result of this entry, Sabrina Company's equity decreases and liabilities increase.
<h3>What is equity?</h3>
Equity in finance refers to ownership of assets that may be accompanied with debts or other liabilities. Liabilities are subtracted from asset value to calculate equity for accounting reasons.
<h3>What is liabilities?</h3>
A liability is an obligation that a person or business has, typically financial in nature. Over time, liabilities are resolved by the transmission of economic advantages like cash, products, or services.
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