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4 November, 23:32

How does receiving a bill to be paid next month for services received affect the accounting equation? a. liabilities increase; owner's equity increases b. assets decrease; owner's equity decreases c. liabilities increase; owner's equity decreases d. assets increase; liabilities increase

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  1. 5 November, 03:16
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    c. liabilities increase; owner's equity decreases

    Explanation:

    Accounting Equation is represented by the following formula:

    Assets = Liabilities + Owner's Equity

    When a bill to be paid next month is received in the current month, it establishes a liability, and expense account is debited whereas a due liability account is credited.

    This would reduce the profits which would in turn reduce the owner's equity and at the same time increase the liabilities amount.
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