Gomez Service Company Paid Its First Installment on a Note

question 11

Multiple Choice

Gomez Service Company paid its first installment on a note payable in the amount of $2,000.How will this transaction affect the accounting equation?

• A)increase liabilities Notes Payable and decrease assets Cash
• B)decrease assets Cash and decrease stockholders' equity Note Payable Expense
• C)decrease assets Cash and decrease assets Notes Receivable
• D)decrease assets Cash and decrease liabilities Notes Payable

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Definitions:

General Contracting

The oversight and coordination of a construction project, typically involving hiring and managing subcontractors.

Subcontracted

The process of assigning part of the obligations and tasks of a primary contract to another party or contractor.

Valid Liens

Legally enforceable claims or rights against property to secure the payment of a debt or obligation.

Conditional Sale Agreement

A contract for the sale of goods where the purchase price is paid in installments and the ownership of the goods does not pass to the buyer until certain conditions, usually the full payment of the purchase price, are met.