ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Any decrease in liabilities is a use of funding and so represents a cash outflow: Decreases in accounts payable imply that a company has paid back what it owes to suppliers.

Detailed explanation-2: -Note. If the assets are acquired by borrowing, through loans, it increases liabilities.

Detailed explanation-3: -The payment of a liability decreases assets and liabilities. Explanation: The payment of a liability decreases assets and liabilities as the liability could be paid only through paying cash or cash equivalents hence it decreases the asset when liability is paid off then it is decreased.

Detailed explanation-4: -Liabilities are the debts you owe to other parties. A liability can be a loan, credit card balances, payroll taxes, accounts payable, expenses you haven’t been invoiced for yet, long-term loans (like a mortgage or a business loan), deferred tax payments, or a long-term lease.