When a Company Accepts a Note in Settlement of a Past

question 110

Multiple Choice

When a company accepts a note in settlement of a past due account, what is the effect on the accounting equation?

• A) an increase in a liability and a decrease in an asset
• B) an increase in an asset and a decrease in an asset
• C) a decrease in an asset and a decrease in stockholders' equity (expense)
• D) a decrease in a liability and an increase in stockholders' equity (revenue)

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Definitions:

Gracile Australopithecines

Refers to a group of early human ancestors characterized by a relatively lighter build, particularly in the skull and teeth.

Robust Australopithecines

Several species within the genus Australopithecus who lived from 1.1 to 2.5 million years ago in eastern and southern Africa; known for the rugged nature of their chewing apparatus (large back teeth, large chewing muscles, and bony ridge on their skull tops for the insertion of these large muscles).

Australopithecine Fossils

Prehistoric remains of hominid species, belonging to the genus Australopithecus, that are among the earliest known human ancestors.