[saad-the-great]

Why does decrease in liability, doesn't have any effect on Owner's Equity?

[pready]

A liability is what you owe.
Owners Equity is the owners interest in the company. This is what the owners have put into the company or earnings that is retained by the company.

A decrease in a liability is where you made a payment on an account that you owe like a bank loan or you are making a payment for supplies purchased on account.

Now think about the journal entry required for a payment and the accounts affected. When you make a payment you are paying cash, so Cash is one account, and you making a payment on an account, so the other account affected is Accounts Payable. For a note payable you will have an interest payment as well so another account that you could have is Interest Payable. The main accounts affected will be: Cash and a Payable account. Owners Equity will not be affected.