Final answer:
Paying off Accounts Payable with cash decreases a company's cash assets, keeping the balance between assets, liabilities, and net worth on the T-account.
Step-by-step explanation:
When a company pays cash to reduce Accounts Payable, an asset account commonly known as cash or cash equivalents is decreased.
The transaction involves reducing the cash balance on the asset's side and decreasing the accounts payable on the liabilities side. By paying off a portion of accounts payable, the liability is reduced, which results in a direct decrease in the amount of cash held by the company. This is because in a T-account, assets and liabilities must stay in balance, meaning that the total assets will always equal the sum of total liabilities and net worth.