Which transaction increases a liability?

Which transaction increases a liability?

• A. Cash sale
• B. Credit sale
• C. Salary payment
• D. Rent invoice

Answer: (D)

Liabilities are obligations to pay someone in the future. A rent invoice creates a payable to the landlord, so it adds to your liabilities because you now owe that amount. The other transactions don’t increase liabilities: a cash sale boosts cash (an asset) and records revenue, not a future payment; a credit sale increases assets through accounts receivable and revenue, with no liability rise; paying salaries uses cash to settle an expense, which reduces assets and doesn’t create a new obligation.

Liabilities are obligations to pay someone in the future. A rent invoice creates a payable to the landlord, so it adds to your liabilities because you now owe that amount. The other transactions don’t increase liabilities: a cash sale boosts cash (an asset) and records revenue, not a future payment; a credit sale increases assets through accounts receivable and revenue, with no liability rise; paying salaries uses cash to settle an expense, which reduces assets and doesn’t create a new obligation.