Bliss Company Settles a Liability by Making a Payment in Cash.How

question 145

Multiple Choice

Bliss Company settles a liability by making a payment in cash.How does paying this liability affect the accounting equation of the business?

• A)assets and liabilities decrease
• B)liabilities decrease and equity increases
• C)assets and liabilities increase
• D)assets increase and equity decreases

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Definitions:

Straight-Line Method

A method of calculating depreciation of an asset where the asset's cost is reduced equally over its useful life.

Amortize Discount

The process of gradually reducing the discount on a bond over the life of the bond.

Bonds Payable

Bonds payable refers to the long-term debt a company owes to bondholders, representing the amount that is due to be paid back at the bond's maturity date along with periodic interest payments.

Straight-Line Method

A depreciation method that allocates an equal amount of the asset's cost to each accounting period of its useful life.