When money is paid to the creditors, the value of assets will in the accounting equation.

decrease

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increase

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not change

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Solution

The correct option is A decrease
When money is paid to the creditors, the value of assets will decrease along with the equivalent reduction in the value of liabilities.

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Similar questions

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

When creditor accepts an asset whose value is more than the amount due to him, he will pay the excess amount which will be __________ to the realisation account.

Rohit has the following transactions:

		Rs
(a)	Commenced business with cash	1,50,000
(b)	Purchased machinery on credit	40,000
(c)	Purchased goods for cash	20,000
(d)	Purchased car for personal use	80,000
(e)	Paid to creditors in full settlement	38,000
(f)	Sold goods for cash costing Rs 5,000	4,500
(g)	Paid rent	1,000
(h)	Commission received in advance	2,000

Prepare the Accounting Equation to show the effect of the above transactions on the assets, liabilities and capital.

Q. When we have received money on realisation of assets. It is shown on the debit side of account.

Q. A change in price level makes analysis of _______ of different accounting year meaningless because accounting records ignore changes in value of money.

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When money is paid to the creditors, the value of assets will in the accounting equation.

The correct option is A decreaseWhen money is paid to the creditors, the value of assets will decrease along with the equivalent reduction in the value of liabilities.

The correct option is A decrease
When money is paid to the creditors, the value of assets will decrease along with the equivalent reduction in the value of liabilities.