As a Result of These Transactions, the Balance Sheet at the End

question 37

Multiple Choice

As a result of these transactions, the Balance Sheet at the end of July will show

• A) an increase to total liabilities of $3,500.
• B) a decrease to total assets of $1,000.
• C) an increase to contributed capital of $7,500.
• D) no change to Total Assets or Total Liabilities

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Definitions:

Residual Claim

The right of common stockholders to claim assets remaining after debts and liabilities have been settled in a liquidation event.

Stockholders' Right

Entitlements or privileges afforded to shareholders, including the right to vote on corporate matters, receive dividends, and share in the distribution of assets upon liquidation.

Dividends

Payments made by a corporation to its shareholder members, typically from profits or reserves.

Retained Earnings

The portion of net income left over after dividends are paid to shareholders, reinvested in the business or used to pay off debt.