If a company paid $38,000 of its accounts payable in cash, what was the effect on the accounting equation?
A. Assets would decrease $38,000, liabilities would decrease $38,000, and equity would increase $38,000.
B. Assets would decrease $38,000, liabilities would decrease $38,000, and equity would decrease $38,000.
C. Assets would increase $38,000 and liabilities would decrease $38,000.
D. There would be no effect on the accounts because the accounts are affected by the same amount.
E. Assets would decrease $38,000, liabilities would decrease $38,000, and equity remains unchanged.
Answer: E
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