Gomez Service Company Paid Its First Installment on a Note

question 117

Multiple Choice

Gomez Service Company paid its first installment on a note payable in the amount of $2,000. How will this transaction affect the accounting equation?

• A) Increase Liabilities (Notes Payable) and decrease Assets (Cash)
• B) Decrease Assets (Cash) and decrease Stockholders' Equity (Note Payable Expense)
• C) Decrease Assets (Cash) and decrease Assets (Notes Receivable)
• D) Decrease Assets (Cash) and decrease Liabilities (Notes Payable)

---

Definitions:

Atresia

A condition characterized by the absence or closure of a normal body opening or duct.

Corpus Albicans

Atrophied corpus luteum, leaving a connective tissue scar in the ovary.

Secondary Follicles

The stage in the development of ovarian follicles where they begin to accumulate fluid and grow larger, preceding ovulation.

Menarche

Establishment of menstrual function; the time of the first menstrual period or flow.