Which of the Following Transactions Decreases Both Assets and Stockholders

question 62

Multiple Choice

Which of the following transactions decreases both assets and 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:

Statute of Frauds

A legal principle that requires certain types of contracts to be written and signed in order to be enforceable.

Mitigating Damages

The legal principle requiring a party who has suffered harm to take reasonable actions to minimize the impact of the damage.

Undue Risk

Excessive or unnecessary danger or threat, often considered in contexts where the level of risk is not justified by the potential benefits or outcomes.

Avoidable Losses

Losses that could have been prevented through reasonable care or alternative actions.