Which of the following transactions will result in decrease in assets and decrease in liabilities?Payment of a promissory note with cashMaterials returned to supplier on accountAll of theseRedemption of debentures (2024)

FAQs

Which transaction results in decrease in assets and decrease in liability? ›

(ii) Decrease in Liability, decrease in Asset: Transaction of payment to a creditor decreases liability (creditor) and also reduces asset (cash or bank).or Loan from bank repaid decreases the asset (Cash/Bank) and decrease the liability (Loan from Bank) simultaneously.

The payment for advertising expenses in cash increases the company's expenses and decreases the cash account. Expense decreases equity. Thus, both assets and equity decrease in this transaction.

An example of a decrease in asset and a liability is payment made by the company to its creditors using cash, in this case, the creditors or liability decreases, as well as a decrease in the cash account.

Answer and Explanation:

The payment of a liability decreases assets and liabilities. Explanation: The payment of a liability decreases assets and liabilities as the liability could be paid only through paying cash or cash equivalents hence it decreases the asset when liability is paid off then it is decreased.

Decrease an asset and decrease equity (asset use event). A company pays cash for utility expenses for the month. This will cause cash (asset) to decrease and the owner's equity (expense) to decrease.

For example, when an owner withdraws cash or other assets from the business for personal use, this reduces the company's assets and also decreases the owner's equity in the business. Another transaction that can decrease both assets and owner's equity is when a company sells an asset at a loss.

Adjustment of the prepaid rent account for rent used during the period. This is the correct option. The rent expense increase which means that net income decreases and the prepaid expenses asset decreases, so total assets also decrease.

Pay dividend to stockholders will decrease total assets Explanation All…

Explanation: The accrual of wages expenses at the year-end increases the liabilities and decreases the net income as the organisation must pay wages to its employees.

For example, a debit increases asset accounts but decreases liability and equity accounts, which supports the general accounting equation of Assets = Liabilities + Equity. On the income statement, debits increase the balances in expense and loss accounts, while credits decrease their balances.

What is a decrease in asset or an increase in liability that results in decrease in equity other than distribution to equity holders? ›

Expenses Decreases in economic benefits during the accounting period in the form of outflows or depletions of assets or incurrences of liabilities that result in decreases in equity, other than those relating to distributions to equity participants.

Decrease Assets and Increase Liabilities (DAIL) is an accounting concept that describes a situation where assets decrease and liabilities increase. In other words, expenses outpace income. It's a business term most often used to assess the stability or growth potential of a company.

Total assets will go down by the same amount. An example would be paying off a $100,000 loan. Liabilities (Notes Payable) decrease by $100,000 and total assets (Cash) will decrease by $100,000. Owner's equity is unchanged.

A credit increases the balance of a liability, equity, gain or revenue account and decreases the balance of an asset, loss or expense account. Credits are recorded on the right side of a journal entry.

Liabilities. Liability increases are recorded with a credit and decreases with a debit. This is the opposite debit and credit rule order used for assets. By definition, the rules of debits and credits mirror the accounting equation: Assets = Liabilities + Equity.

Liabilities are increased by credits and decreased by debits. Equity accounts are increased by credits and decreased by debits. Revenues are increased by credits and decreased by debits. Expenses are increased by debits and decreased by credits.

In accounting, a credit is an entry that increases a liability account or decreases an asset account. A debit is the opposite. It is an entry that increases an asset account or decreases a liability account. In the double-entry accounting system, transactions are recorded in terms of debits and credits.

Losses -- decreases in assets or increases in liabilities from peripheral transactions. Both revenues and gains are inflows of net assets. However, revenues occur in the normal course of operations, whereas gains occur from transactions peripheral to the central activities of the company.