Question

What is the effect on total assets and​ stockholders' equity of paying the telephone bill as soon as it is received each​ month? Total assets ​Stockholders' equity A. No effect Decrease B. No effect No effect C. Decrease No effect D. Decrease Decrease

Answer 1

Answer:

Option C) Decrease in Total Assets , and No Effect on Equity

Explanation:

Telephone bill it's a Current Liability , if you decide to pay it as soon as you receive it you have to use Cash which is part of your Current Asset, so the impact it's a decreased in your Current Assets through the Cash component.

This movement has no impact in the Sotckholder Equity.