Explain How the Following General Journal Entry Affects the Accounting

question 37

Multiple Choice

Explain how the following general journal entry affects the accounting equation.

• A)Both assets and stockholders' equity increase.
• B)Both liabilities and assets increase.
• C)Assets increase and stockholders' equity decreases.
• D)Liabilities increase and stockholders' equity decreases.

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Definitions:

Obligor

In contract law, the party who is obligated to deliver on a promise or to undertake some act.

Assignment

A legal transfer of rights, benefits, or obligations from one party to another.

Quantum Meruit

is a Latin term meaning "as much as he has earned," used in legal contexts to describe the entitlement to be paid for services rendered or work done when no contract exists or where a contract exists but cannot be enforced.

Court-Created Damages

Damages awarded by a court as a remedy in a lawsuit, often in cases where traditional damages are insufficient to resolve the harm done.