Payment of expenses will ______ the assets

A. Increase

B. Reduce

C. Apportion

D. Overstate

Answer: Option B

Solution(By Examveda Team)

Payment of expenses will reduce the assets. When an expense is recorded at the same time it is paid for with cash, the cash (asset) account declines, while the amount of the expense reduces the retained earnings account.

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Comments ( 2 )

  1. Examveda
    Examveda :
    5 years ago

    Payment of expenses will be made through either bank or cash. Bank & Cash is assets. And balance of cash and bank will be reduced.

  2. Rohan Panda
    Rohan Panda :
    5 years ago

    can anyone explain the logic behind it

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