Which of the Following Transactions Would Increase One Asset, Decrease

question 102

Multiple Choice

Which of the following transactions would increase one asset, decrease another asset, and increase a liability?

• A)purchasing supplies and equipment on account
• B)paying liabilities incurred last period
• C)owner investment of cash and equipment into the business
• D)purchasing land with a cash down payment and a note payable

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Definitions:

Absorption Costing

An accounting method that includes all manufacturing costs, such as direct materials, direct labor, and both variable and fixed manufacturing overhead, in the cost of a product.

Unit Product Cost

The total cost associated with producing one unit of product, encompassing both fixed and variable costs.

Operations

Refers to the day-to-day activities involved in the running of a business for the purpose of producing value for the stakeholders.

Absorption Costing

An evaluation technique that assimilates all production costs, covering direct materials, direct labor, and variable and fixed overheads, into the price of a product.