What is the consequence on financial statements when a bill is paid?

When a bill is paid, it is reflected in the financial statements through the reduction of cash and accounts payable. Paying a bill involves using cash, which results in a decrease in the cash asset on the balance sheet. Simultaneously, the obligation represented in accounts payable, which is a liability, is settled, leading to a decrease in that liability.

This transaction reflects the outflow of resources (cash) to satisfy an outstanding obligation (the bill). Thus, the correct option illustrates both the decrease in cash and the decrease in accounts payable, aligning with the double-entry accounting principles, where every transaction affects at least two accounts.

In contrast, other options do not accurately represent this transaction because they either increase cash or incorrectly suggest changes to accounts receivable, which is not relevant in this context, as bills typically pertain to payable accounts rather than receivables.