Question

Aster Inc. paid salaries of $28,000 to its employees. How are the balance sheet and income statement affected by this transaction? Assets ↓ Expenses ↑ Assets ↑ Expenses ↓ Liabilities ↓ Income ↑ Liabilities ↑ Income ↓

Answer 1

Answer: Assets and Expenses both will reduce by $28000.

Explanation:

Since we have given that

Aster Inc. paid salaries of $28000 to its employees.

He need to pay in cash or with cheque , So it will reduce the assets (Short term assets or current assets ) and

Salary paid is considered as an expense for a company.So, after paying the salary his expense will also get reduced.

So, In balance sheet, Cash or Bank will reduce by $28000 ,

In income statement , His expense will reduce by $28000.

Hence, Assets and Expenses both will reduce by $28000.

Answer 2

Liabilities would be your answer hope this helps