For the Following Transaction, Identify the Type of Change That

question 14

Multiple Choice

For the following transaction, identify the type of change that would have occurred in the accounting equation: Assets = Liabilities + Share capital + Opening retained profits + Revenue - Expenses - Dividends
A new CEO was appointed to commence in three months' time on a salary of $400 000 per annum.

• A) A liability increased and another liability decreased.
• B) An asset decreased and a liability decreased.
• C) An asset increased and revenue increased.
• D) This had no effect on the accounting equation.

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Definitions:

Selling Price

The amount a buyer pays to acquire a product or service from a seller.

Value-Based Pricing

A pricing strategy where the price of a product or service is determined by the perceived value to the customer rather than the cost of production.

Useful Life

The estimated period over which a fixed asset is expected to be usable by an entity, beyond which it is considered to depreciate to a value of no or minimal worth.

Preventive Maintenance

Maintenance activities performed on equipment and facilities to prevent potential problems and ensure smooth functioning.