The Following Transaction Has Been Recorded in the General Journal

question 31

Multiple Choice

The following transaction has been recorded in the general journal:

How will this transaction affect the company's financial statements after it is posted to the ledger accounts?

• A)Decreases Total Liabilities
• B)Increases Retained Earnings
• C)Decreases Total Assets
• D)Decreases Stockholders' Equity

---

Definitions:

Inventory Decrease

A reduction in the quantity or value of inventory held by a business over a specific period.

Cash Payments

Transactions involving the transfer of cash from one entity to another, usually as exchanges for goods, services, or to settle debts.

Purchases

Transactions involving the buying of goods or services for the purpose of resale or direct use in production or operations.

Free Cash Flow

The amount of cash generated by a business after accounting for capital expenditures such as buildings or equipment, indicating the company's ability to generate additional revenues.