During Year 2, Millstone Company Provided $6,500 of Services for Cash

question 118

Multiple Choice

During Year 2, Millstone Company provided $6,500 of services for cash, paid cash dividends of $1,000 to owners, and paid $4,000 cash for expenses. Liabilities were unchanged. Which of the following statements accurately describes the effect of these events on the elements of the company's financial statements?

• A)Assets increased by $6,500.
• B)Assets increased by $1,500.
• C)Stockholders' equity increased by $2,500.
• D)Assets increased by $5,500.

---

Definitions:

Random Assignment

A method used in experimental designs to allocate participants to different groups in a study, ensuring each has an equal chance of being assigned to any group.

Internal Validity

The extent to which a study can demonstrate that a causal relationship exists between variables, without being influenced by external factors.

One-Group Pretest-Posttest Uninterpretable Design

Refers to a simplistic experimental design where a single group of subjects is tested before and after an intervention without a control group, making causal interpretations difficult.

Internal Validity

The extent to which a study can demonstrate a causal relationship between variables, free of confounding factors.