Which of the Following Direct Effects on the Accounting Equation

question 40

Multiple Choice

Which of the following direct effects on the accounting equation is not possible as a result of a single business transaction which impacts only two accounts?

• A)An increase in a liability and a decrease in an asset.
• B)An increase in stockholders' equity and an increase in an asset.
• C)An increase in an asset and a decrease in an asset.
• D)A decrease in stockholders' equity and a decrease in an asset.

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Definitions:

Quantitative Measures

Metrics or data points that can be quantified numerically to assess performance, trends, or changes over time.

Asset Purchases

Transactions involving the acquisition of physical or intangible assets that are expected to generate economic benefits for the business.

Capital Investment Decisions

Decisions made by businesses regarding large financial investments in projects or assets, considering future benefits and costs to maximize profitability.

Income Tax

A tax levied by the government directly on income, especially an annual tax on personal income.