Question

Paying salaries to employees for the current period would have what effect on the accounting equation?

a) Increase assets and increase liabilities
b) Increase assets and increase owner's equity
c) Decrease assets and decrease liabilities
d) Increase assets and decrease owner's equity

Answer 1

Paying salaries to employees for the current period would increase assets and decrease owner's equity.

Step-by-step explanation:

Paying salaries to employees for the current period would increase assets and decrease owner's equity in the accounting equation.

When salaries are paid to employees, it is an expense for the company, which decreases owner's equity. However, it also increases the assets of the company as the employees receive payment in the form of cash or bank balance.