If a Company Paid $38,000 of Its Accounts Payable in Cash

question 220

Multiple Choice

If a company paid $38,000 of its accounts payable in cash, what was the effect on the accounting equation?

• A) Assets would decrease $38,000, liabilities would decrease $38,000, and equity would increase $38,000.
• B) Assets would decrease $38,000, liabilities would decrease $38,000, and equity remains unchanged.
• C) Assets would increase $38,000 and liabilities would decrease $38,000.
• D) There would be no effect on the accounts because the accounts are affected by the same amount.
• E) Assets would decrease $38,000, liabilities would decrease $38,000, and equity would decrease $38,000.

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