Which of the Following Transactions Increases Liabilities and Decreases Stockholders

question 194

Multiple Choice

Which of the following transactions increases liabilities and decreases stockholders' equity?

• A) Declaration and payment of a dividend
• B) Advance payment made for insurance
• C) Receipt of a phone bill to be paid at a later time
• D) Payment of a liability

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Definitions:

Consolidated Financial Statements

Financial statements that present the financial position and performance of a parent company and its subsidiaries as if they were a single economic entity.

Statement of Financial Position

Another term for the balance sheet, showing a company's financial status by detailing assets, liabilities, and shareholders' equity at a specific point in time.

Identifiable Net Assets

The assets and liabilities of a company that can be separately identified and valued during a merger or acquisition process.

Issued Capital

refers to the total value of a company's shares that have been sold and are held by shareholders.