In Part,a Transaction Affects the Accounting Equation by Decreasing a Liability.There

question 35

Multiple Choice

In part,a transaction affects the accounting equation by decreasing a liability.There is no effect on assets.Which of the following statements is correct with regards to this transaction?

• A)If other liabilities are unchanged,stockholders' equity must be decreasing.
• B)If other liabilities are unchanged,stockholders' equity must be increasing.
• C)If stockholders' equity is unchanged,another liability must be decreasing.
• D)If stockholders' equity is unchanged,other liabilities must be unchanged.

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Definitions:

Expenses

Costs incurred in the process of earning revenue, including operational, administrative, and marketing costs.

Total Stockholders' Equity

The total value of a corporation's equity owned by shareholders, synonymous with stockholders' equity but emphasizes the aggregation.

Retained Earnings

The part of the net earnings kept by the company instead of being paid out to shareholders as dividends.

Common Stock

A type of equity security that represents ownership in a corporation, granting holders the right to vote at shareholder meetings and receive dividends.