A $5 000 Account Payable Is Paid by the Business

question 94

Multiple Choice

A $5 000 account payable is paid by the business. How is the accounting equation affected?

• A)Assets increase $5 000; liabilities increase $5 000.
• B)Assets increase $5 000; owners' equity decreases $5 000.
• C)Assets decrease $5 000; owners' equity increases $5 000.
• D)Assets decrease $5 000; liabilities decrease $5 000.

---

Definitions:

Cost of Goods Manufactured

This refers to the total production cost incurred by a company to manufacture products in a specific period, including materials, labor, and overhead costs.

Ending Inventory

The total value of all goods available for sale at the end of an accounting period.

Merchandising Company

A type of business that purchases products to resell them at a profit without changing their form.

Ending Finished Goods

The inventory of goods manufactured and ready for sale at the end of an accounting period.