A Business Settles a Liability by Making a Payment in Cash

question 7

Multiple Choice

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

• A)Assets decrease; liabilities decrease.
• B)Liabilities decrease; equity increases.
• C)Assets increase; liabilities increase.
• D)Assets increase; equity decreases.

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Definitions:

Victim Mentality

A mindset where an individual consistently perceives themselves as the victim of circumstances beyond their control, potentially hindering their ability to take responsibility for their actions.

Interactional Justice

The perceived fairness of the interpersonal treatment employees receive from their employers.

Informational Justice

The perceived fairness of the processes and methods used to distribute information within organizations or social systems.

Distributive Justice

The perceived fairness of the distribution of resources, benefits, and burdens within a society or organization.