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No, just because company receives cash does not mean that the liabilities will go down. Companies receive cash for merchandise sold, services rendered, money owed to the company from customers, investments, etc. These things will increase assets and either Revenue or Owners Equity (Stockholders equity) but they will not effect liabilities.
Liabilities generally refer to debts owed by the company, such as Accounts Payable, notes payable etc, which are decreased by the paying of cash, which in turn decreases Assets while decreasing Liabilities at the same time.
In some cases however, Liabilities can "increase" for a short period when a company receives cash. This happens when a company receives cash for a service or even merchandise that they have not supplied to the customer.
Example, say you are a watch manufacturer, you sale 2,000 watches to a customer but you won't actually ship the watches to the customer for say 30 days. That Unearned Revenue (cash) you receive is considered a liability until you actually fulfill your agreement with the customer. The reason for this is due to the fact that if anything happens and you can not fulfill the obligation, then you must repay the money to the customer, hence making it a short term liability. Once the obligation is fulfilled the money is recorded as Revenue and is no longer a liability to you.
What else can I help you with?
How do you decrease a liability?
Liabilities are decreased by a debit entry...typically a cash payment (Dr. the liability; Cr. Cash)
Does the payment of a liability decrease both cash and accounts payable?
no it just decreases cash
What is bookkeeping voucher?
A document recording a liability or allowing for the payment of a liability, or debt. A voucher would be held by the person or company who will receive payment.
A check drawn by a company for 270 in payment of a liability was recorded in the journal as 720 What entry is required in the company?
Reduction in liability for 550 should be recorded in journal to reduce the excess payment.
A business paid 7000 to a creditor in payment of an amount owed. The effect of the transaction on the accounting equation was to?
decrease in asset and decrease in liability
Transaction that will decrese an asset anf decrease a liability?
Payment to the creditors Creditors Decrease Bank balance decrease
How can one decrease a liability account?
To decrease a liability account, you can either pay off the debt or make a payment towards the amount owed. This reduces the amount of money that you owe, resulting in a decrease in the liability account.
How do you decrease a liability?
Liabilities are decreased by a debit entry...typically a cash payment (Dr. the liability; Cr. Cash)
What is vouchers?
A document recording a liability or allowing for the payment of a liability, or debt. A voucher would be held by the person or company who will receive payment.
Does the payment of a liability decrease both cash and accounts payable?
no it just decreases cash
What is bookkeeping voucher?
A document recording a liability or allowing for the payment of a liability, or debt. A voucher would be held by the person or company who will receive payment.
A check drawn by a company for 270 in payment of a liability was recorded in the journal as 720 What entry is required in the company?
Reduction in liability for 550 should be recorded in journal to reduce the excess payment.
A business paid 7000 to a creditor in payment of an amount owed. The effect of the transaction on the accounting equation was to?
decrease in asset and decrease in liability
Decrease an asset account and decrease a liability account?
if you have a asset and you sale it and then money which you get pay as a liability so decreas in asset and decreas in liability occurs.
Payments of accounts payable will have what affect on total assets?
Making a payment on an account payable will decrease cash. At the same time it will also decrease your liability for that same amount.
What is forfeited share?
Forfeited shares Shares in a no-liability company which are forfeited (lost) to the previous owner because of non-payment of a call on the shares. Forfeited shares Shares in a no-liability company which are forfeited (lost) to the previous owner because of non-payment of a call on the shares.
What happen when wages payable is decreased?
Wages Payable is a liability account that records wages that a company owes but has not yet paid. A decrease in this account more than likely signifies payment of those wages.About the only other "decrease" which is generally a rarity, is if the account was increased accident by an amount that the company did not owe and there was an adjusting entry made to record that error.
