Newton Company Settles a Liability by Making a Payment in Cash.How

question 162

Multiple Choice

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

• A) assets and liabilities decrease
• B) liabilities decrease and equity increases
• C) assets and liabilities increase
• D) assets increase and equity decreases

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Definitions:

Long-Run Supply Curve

A graphical representation showing the relationship between the price of a good and the quantity supplied over a period long enough for firms to enter or exit the market.

Prices of Resources

The costs associated with acquiring the inputs needed for production, such as labor, raw materials, and capital.

Economic Profits

The variance between gross income and total costs, considering both explicit and implicit expenses.

Long-Run Market Adjustments

Changes that firms or entire industries undergo over an extended period in response to shifts in demand, technology, and competitive landscapes.