What Is the Effect on the Statement of Financial Position

question 27

Multiple Choice

What is the effect on the statement of financial position when the business pays a creditor?

• A)Decrease asset creditor; decrease liability bank
• B)Decrease asset bank; decrease liability creditor
• C)Decrease asset bank; decrease equity
• D)None of the above

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Definitions:

Price Controls

Government-imposed limits on the prices charged for goods and services in a market, typically to curb inflation or protect consumers.

Deadweight Loss

A loss of economic efficiency that can occur when equilibrium for a good or a service is not achieved or is not achievable.

Agricultural Market

A marketplace for the buying and selling of agricultural products, such as crops and livestock, often influenced by government policies.

Binding Price Floor

A government-imposed price control or limit that sets a minimum price above the equilibrium price, leading to surplus in the market.