Which of the Following Transactions Affects Both the Income Statement

question 45

Multiple Choice

Which of the following transactions affects both the income statement and the statement of cash flows?

• A)Selling stock in exchange for cash.
• B)Declaring and paying a cash dividend.
• C)Selling a product to a customer which creates an account receivable.
• D)Paying employee wages as they are earned.

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Definitions:

Original Entry

The initial recording of a financial transaction in the accounting records or journal, marking the first stage in the accounting process.

Transaction Recording

The process of documenting all business transactions in the accounting records of an organization, following accounting principles.

Collusion

A secret agreement between two or more parties for a deceitful, illegal, or fraudulent purpose to deceive others.

Prescribed Controls

Specific procedures and policies implemented by a company to safeguard its assets, ensure accurate financial reporting, and comply with laws and regulations.