Which of the Following Transactions Will Cause Both the Left

question 50

Multiple Choice

Which of the following transactions will cause both the left and right side of the accounting equation to decrease?

• A)Collecting cash from a customer who owed us money.
• B)Paying a supplier for inventory we previously purchased on account.
• C)Borrowing money from a bank.
• D)Purchasing equipment using cash.

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Definitions:

Capital Gains

Capital gains are the profit made from the sale of an asset or investment which has increased in value over the holding period.

Current Income

Earnings derived from investments or employment that are received regularly, such as dividends or salaries.

High-Dividend Policy

A corporate strategy focusing on paying out a large portion of its earnings to shareholders in the form of dividends.