question 4\n0.5 points\na business paid $7,000 to a creditor for an amount owed. the effect of the…

question 4\n0.5 points\na business paid $7,000 to a creditor for an amount owed. the effect of the transaction on the accounting equation was to\na increase an asset; increase a liability\nb increase an asset; decrease another asset\nc decrease an asset; decrease a liability\nd increase an asset; increase stockholders equity

question 4\n0.5 points\na business paid $7,000 to a creditor for an amount owed. the effect of the transaction on the accounting equation was to\na increase an asset; increase a liability\nb increase an asset; decrease another asset\nc decrease an asset; decrease a liability\nd increase an asset; increase stockholders equity

Answer

Explanation:

Step1: Recall accounting - equation

The accounting equation is Assets = Liabilities + Stockholders' Equity.

Step2: Analyze the transaction

When a business pays $7,000 to a creditor for an amount owed, cash (an asset) decreases because the business is using cash to make the payment. At the same time, accounts - payable (a liability) decreases because the amount owed to the creditor is reduced.

Answer:

C. decrease an asset; decrease a liability