explain how an expense of $750 paid in cash would affect the accounting equation. your answer
explain how an expense of $750 paid in cash would affect the accounting equation. your answer
Answer
Brief Explanations:
The accounting equation is Assets = Liabilities + Equity. When an expense of $750 is paid in cash:
- Assets (cash) decrease by $750.
- Expenses reduce net income, and since net income is part of equity (retained earnings), equity decreases by $750.
Answer:
Assets (cash) decrease by $750 and Equity (due to the expense reducing retained earnings) decreases by $750.