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Question(s) / Instruction(s):

Decameter Company paid off $40,000 of its accounts payable in cash. What would be the effects of this transaction on the accounting equation?

a)            Assets, $40,000 decrease; liabilities, $40,000 increase; equity, no effect.

b)            Assets, no effect; liabilities, $40,000 decrease; equity, $40,000 increase.

c)            Assets, $40,000 decrease; liabilities, $40,000 decrease; equity, no effect.

d)            Assets, $40,000 decrease; liabilities, no effect; equity $40,000 decrease.

e)            Assets, $40,000 increase; liabilities, no effect; equity, $40,000 increase.

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