Answer:
Decrease in cash, no changes in liabilities or owners equity.
Step-by-step explanation:
When you pay $4,000 in cash for rent, it affects the accounting equation, which states that:
Assets
=
Liabilities
+
Owner’s Equity
Assets=Liabilities+Owner’s Equity
Since you paid cash for rent, the specific accounts affected are:
Assets: Cash decreases by $4,000.
Liabilities: There is no direct effect on liabilities for paying rent, assuming it's not related to a loan or mortgage payable.
Owner's Equity: There is no direct effect on owner's equity for paying rent.
So, the effect on each category is as follows:
Assets: Decrease by $4,000.
Liabilities: No effect.
Owner's Equity: No effect.
Overall, the balance sheet would show a decrease in cash (an asset), with no change in liabilities or owner's equity.
