Question

Venus inc. paid $5,000 for account payable. how does this transaction affect the accounting equation of venus? select one:

a. assets decrease by $5,000 and liabilities decrease by $5,000.
b. assets decrease by $5,000 and equity increases by $5,000.
c. assets increase by $5,000 and equity decreases by $5,000.
d. assets increase by $5,000 and liabilities increase by $5,000.

Answer 1

The journal entry for this transaction is

Account payable (Dr) 5000
Cash. (Cr) 5000

So the answer is
a. assets decrease by $5,000 and liabilities decrease by $5,000.

Hope it helps!