Saturn Company Paid $10,000 on Accounts Payable

question 193

Multiple Choice

Saturn Company paid $10,000 on accounts payable.How does this transaction affect the accounting equation of Saturn?

• A) assets decrease by $10,000 and equity increases by $10,000
• B) assets decrease by $10,000 and liabilities decrease by $10,000
• C) assets increase by $10,000 and equity decreases by $10,000
• D) assets increase by $10,000 and liabilities increase by $10,000

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Definitions:

Supracompetitive Pricing

Setting the price of a product or service higher than the competitive market price, often as a result of monopoly power or market inefficiencies.

Sovereign Compulsion Doctrine

A legal principle that excuses a person or entity from liability if an action was performed under the direct order or compulsion of a government or sovereign.

Act of State Doctrine

A principle in international law that prohibits a country's courts from examining the validity of public acts committed by another country within its own territory.

Conglomerate Merger

A type of merger where two or more companies operating in different industries join forces or assets.