If a Transaction Causes an Equity Account to Increase, Which

question 44

Multiple Choice

If a transaction causes an equity account to increase, which of these related effects may also occur?

• A) An increase of an equal amount in a liability account.
• B) An increase of an equal amount in an asset account.
• C) A decrease of an equal amount in an asset account.
• D) An increase of an equal amount in another equity account.

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Definitions:

Free Trade

A policy to eliminate discrimination against imports and exports, allowing goods to move freely between countries without tariffs or quotas.

Comparative Advantage

The ability of an entity to produce a good or offer a service at a lower opportunity cost than its competitors.

Dumping

The practice of a company selling a product in a foreign market at a price lower than its cost of production or lower than the price in its domestic market.

Diversification

An investment strategy that involves spreading investments among various financial instruments, industries, and other categories to reduce risk.