If an expense is paid with cash assets will decrease. retained earnings will increase. liabilities will increase. expenses will decrease.

Question

Giovanna Middleton

Social Studies

18 July, 11:53

If an expense is paid with cash assets will decrease. retained earnings will increase. liabilities will increase. expenses will decrease.

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Answers (1)

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Brody Williams · Answer 1

If an expense is paid with cash the assets will decrease.

Explanation:

As long as cash is termed as a current asset, its flowing out of the business would be considered as a decrease in the assets. Though it is a conventional practice to pay for expenses in cash, it has to be taken into consideration that the assets of the business are decreasing with such payments done. But as cash is a highly fluid asset, its inflow and outflow do not bother the business much.