Which account is affected when a business pays salaries using cash?

When a business pays salaries in cash, it leads to a decrease in the cash account, as cash is being used to make the payment. This transaction also affects retained earnings because salaries are considered an expense. When expenses are incurred, they reduce net income, which in turn lowers retained earnings in the equity section of the balance sheet.

Therefore, the correct answer involves the cash account decreasing due to the payment of salaries and retained earnings also decreasing due to the expense incurred by the business for these salaries. This reflects the fundamental accounting principle that every transaction affects at least two accounts, maintaining the balance in the accounting equation.

In this case, while the cash account decreases, the expenses related to salaries reduce retained earnings, capturing the impact of the transaction on the financial statements accurately.