Final answer:
A payment towards accounts payable (A/P) results in a decrease in the company's assets due to cash outflow, as well as a decrease in its liabilities as the A/P balance is reduced, maintaining the balance sheet equation.
Step-by-step explanation:
The query, A payment towards A/P decreases assets and decreases liabilities?, is examining the impact of an accounts payable (A/P) transaction on a company's balance sheet. When a payment is made towards A/P, the company's assets decrease because cash (an asset) is paid out. Simultaneously, the company's liabilities decrease as the A/P balance is being reduced by the payment.
Given a T-account structure, where assets are on the left and liabilities plus net worth are on the right, this action keeps the accounting equation in balance, with assets equalling liabilities plus net worth. Making such a payment does not alter the net worth but ensures the balance sheet correctly reflects the company's financial position post-transaction.