Which of the Following Is True When Considering the Accounting

question 74

Multiple Choice

Which of the following is true when considering the accounting equation?

• A) An increase in an asset must always equal a decrease in a liability.
• B) For every transaction an asset and a liability must be affected.
• C) An increase in a liability must equal a decrease in owner's equity.
• D) An increase in an asset may result in a decrease in another asset.

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Definitions:

Effective Annualized Rate

The interest rate on an investment or loan on an annual basis, taking compounding into account.

Inflation

The rate at which the general level of prices for goods and services is rising, eroding purchasing power.

Effective Interest Rate

The actual annual interest rate that an investor earns or pays, taking into account the effect of compounding over the period.

GICs

Guaranteed Investment Certificates, a secure investment that guarantees to preserve the principal amount while offering a fixed interest rate over a specified period.