The effect of the payment of liability is that it

Assessment: JAMB UTME - Principles of Accounts - 1997 Subject: Financial Accounting

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The effect of the payment of liability is that it
Answer Details
The effect of the payment of liability is that it decreases liabilities and decreases assets. When a liability is paid, it means that the company has reduced its obligation to pay back its debts or outstanding expenses. As a result, the liability account is decreased. The payment is usually made using an asset such as cash, which also decreases the amount of assets the company has. Therefore, paying a liability has the effect of decreasing both the liabilities and assets of a company.
Read lesson note on The Accounting Equation And Double Entry Principle (WAEC)
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