Question

how does one know if the liability is going to increase or decrease on certain transtions

Answer 1

Liability is going to increase or decrease is based on Accounting equation or Journal entries of certain transaction.

For example Account payable is current liabilities and we purchase goods on credit then in this situation Account payable will be increase.

Journal entries for goods purchase on credit:

Purchase Account ...... Debit

Account Payable Account ..... Credit

Now , we know that Account payable is liability and it consist credit balance so according to journal entries we have credited Account payable means liability will increase on the other hand if we Debited Account Payable then in that situation Account payable will be decrease.