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.

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Definitions:

Direct Labour Cost

The total cost of wages paid to workers directly involved in manufacturing a product or providing a service.

Manufacturing Overhead

The indirect costs related to manufacturing that are not directly tied to a specific product, such as utilities, rent, and salaries of maintenance staff.

Indirect Costs

Expenses not directly tied to a specific product or service, such as utilities, rent, and administrative salaries, that are necessary for running the business.

Law Firm

A business entity formed by one or more lawyers to engage in the practice of law, offering services such as legal advice and representation.