When amount is paid to creditors, what will be the impact in accounting equation?

Assets - No effect
Liabilities - Decrease
Capital - Increase

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Assets - Decrease
Liabilities -Decrease
Capital - No effect

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Assets - Decrease
Liabilities - No effect
Capital - Decrease

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No impact

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Solution

The correct option is B
Assets - Decrease
Liabilities -Decrease
Capital - No effect

When amount is paid, cash will decrease which is an asset and creditors will reduce which is a liability.

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Similar questions

Give an example for each of the following types of transaction.
(i) Increase in one asset, decrease in another asset.
(ii) Increase in asset, increase in liability.
(iii) Increase in asset, increase in owner's capital.
(iv) Decrease in asset, decrease in liability.
(v) Decrease in asset, decrease in owner's capital.
(vi) Decrease in liabilities, increase in owner's capital.
(vii) Increase in one liability, decrease in another liability.
(viii) Increase in liabilities, decrease in owner's capital.

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(ii) Decrease in an asset and a liability.
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(iv) Decrease in assets and capital.

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Q. Which of the following transactions will result in decrease in assets and decrease in liabilities?

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When amount is paid to creditors, what will be the impact in accounting equation?

The correct option is B Assets - Decrease Liabilities -Decrease Capital - No effect When amount is paid, cash will decrease which is an asset and creditors will reduce which is a liability.

The correct option is B
Assets - Decrease
Liabilities -Decrease
Capital - No effect

When amount is paid, cash will decrease which is an asset and creditors will reduce which is a liability.