Accounting Multiple Choice Question – 5 September 2018

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

When a business pays one of its creditors by cheque, then the impact on their assets and / or liabilities is:

Select ONE answer:

  1. Effect upon Assets – Decrease bank / Effect upon Liabilities – Decrease creditors
  2. Effect upon Assets – Increase bank / Effect upon Liabilities – Increase creditors
  3. Effect upon Assets – Decrease bank / Effect upon Liabilities – Increase creditors
  4. None of the above

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Accounting KS5 classes.

The answer is 1 – The business has less money in its bank account because it has just paid some money to one of its creditors & it also owes less to its creditors because the money it paid was used to settle a debt which it previously owed.

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