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There Are Four Transactions That Affect Stockholders' Equity

question 230

Essay

There are four transactions that affect stockholders' equity.

(a) What are the two types of transactions that increase stockholders' equity?
(b) What are the two types of transactions that decrease stockholders' equity?


Definitions:

Collection Period

The average number of days it takes for a business to receive payments from its customers after a sale has been made.

Accounts Receivable

Represents the money owed to a company by its customers for goods or services that have been delivered but not yet paid for.

Statement Of Cash Flows

An accounting statement that illustrates the influence of changes in balance sheet accounts and earnings on the flow of cash and cash equivalents, categorized by operating, investing, and financing activities.

Inventory

The total amount of goods and materials held by a company in stock, ready for sale or production.

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