If a Business Issued a Check for $1,000 to Pay

question 78

Multiple Choice

If a business issued a check for $1,000 to pay for two months rent in advance,analyze the effect on the firms' assets,liabilities and owner's equity.

• A) Cash will increase
• B) Accounts Payable will decrease
• C) Prepaid Rent will increase
• D) Owner's Capital will increase

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Definitions:

Preferred Stock

A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock, often with fixed dividends.

Common Stock

A type of equity security that represents ownership in a corporation, entitling the holder to dividends and, in many cases, voting rights.

Securities

Financial instruments that represent ownership positions in corporations (stock), creditor relationships with governmental bodies or corporations (bonds), or rights to ownership as represented by an option.

Subscriptions Receivable

An amount owed by customers for subscription services or products that have been provided but not yet paid for.