The Payment of Accounts Payable Results in an

question 2

Multiple Choice

The payment of accounts payable results in an

• A) decrease in liabilities and a decrease in assets.
• B) decrease in liabilities and an increase in owners' equity.
• C) decrease in liabilities and an increase in assets.
• D) increase in liabilities and a decrease in owners' equity.

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Definitions:

Allowance Account

An account used to reduce the carrying amount of accounts receivable or loans to their net realizable value, reflecting expected losses due to uncollectibility.

Aging

A method used to categorize accounts receivable based on the length of time an invoice has been outstanding.

Accounts Receivable

Unpaid customer debts to a company for goods or services that have been supplied.

Bad Debts Expense

An expense reported on the income statement reflecting the cost of estimated uncollectible accounts receivable.