A Business Paid $7,000 to a Creditor in Payment of an Amount

question 42

Multiple Choice

A business paid $7,000 to a creditor in payment of an amount owed. The effect of the transaction on the accounting equation was to

• A) increase an asset, decrease another asset
• B) decrease an asset, decrease a liability
• C) increase an asset, increase a liability
• D) increase an asset, increase owner's equity

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Definitions:

Expense

The cost incurred in the process of generating revenue, representing money spent or resources consumed to conduct business activities.

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