What Is the Effect on the Balance Sheet If a Company

question 153

Multiple Choice

What is the effect on the balance sheet if a company purchases equipment using cash?

• A) No effect on total assets; Decrease total liabilities; Increase total stockholders' equity
• B) Increase total assets; Increase total liabilities; Increase total stockholders' equity
• C) Decrease total assets; No effect on total liabilities; Increase total stockholders' equity
• D) No effect on total assets; No effect on total liabilities; No effect on total stockholders' equity

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Definitions:

FMLA

The Family and Medical Leave Act, a U.S. federal law that provides eligible employees with unpaid, job-protected leave for certain family and medical reasons.

Employers

Entities that hire individuals to perform various jobs in exchange for salary or wages.

Employees

Individuals who are hired by a company to perform tasks in exchange for compensation, under the direction and control of the employer.

COBRA

A federal law in the United States that allows for the temporary continuation of health coverage at group rates for employees and their families under certain circumstances such as job loss.