Which of the Following Transactions Would Cause One Asset to Increase

question 91

Multiple Choice

Which of the following transactions would cause one asset to increase and another asset to decrease?

• A)The owner invested cash in the business.
• B)The business paid a creditor.
• C)The business incurred an expense on credit.
• D)The business bought supplies for cash.

---

Definitions:

Nominal Rate

The stated interest rate of an investment or loan, not including the effect of compound interest or inflation adjustments.

Monthly Compounded

A method of calculating interest where the interest is added to the principal each month, resulting in interest earned on interest.

Nominal Rate

The stated interest rate of a bond or loan, not adjusted for inflation.

Compounded Annually

A method in which interest is calculated once per year and added to the total sum, affecting the principal for the next period.