Can you suggest a situation where cash increases and a liability decreases?
Answer -
No, it is not possible for assets or cash to increase and liabilities to decrease in the same situation in an accounting entry. This is because of Accounting Principle of Duality which implies that debit is always equal to Credit.
Assets are generally written on the debit side whereas liabilities on the credit side so if that happens then the debit side will increase however the credit side will decrease, so this is in violation with the Accounting Principle of Duality. So, it is not possible for cash to increase and Liabilities to decrease in the same situation.
Can you suggest a situation where cash increases and a liability decreases?
Cash outflows result from increases in asset accounts and decreases in liability and equity accounts. True False
Collection of a $2800 Accounts Receivable increases an asset $2800; decreases a liability $2800. decreases a liability $2800; increases stockholders' equity $2800. increases an asset $2800; decreases an asset $2800. decreases an asset $2800; decreases a liability $2800. Save for Later 80
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