If Mr. Ajasin paid his creditors N5000 out of N20 000 owed; what would be the effect of this transaction on the accounting equation?

A. A decrease in the total assets by N5000
B. An increase in the total liabilities and owners’ equity by N15 000
C. An increase in the total assets by N15 000
D. A decrease in owners’ equity by N5000

Correct Answer:

Option A – A decrease in the total assets by N5000