What Is the Result of Recording a Borrowing Transaction

question 6

Multiple Choice

What is the result of recording a borrowing transaction?

• A) An increase in both cash and shareholders' equity.
• B) An increase in cash and a decrease in liabilities.
• C) An increase in both cash and liabilities.
• D) A decrease in cash and an increase in liabilities.

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Definitions:

Return on Equity

A financial ratio calculated by dividing net income by shareholder equity, used to measure the profitability of a company in generating profit from its equity investments.

Debt-to-Equity Ratio

This ratio measures the mix of shareholders' equity to debt in financing a company's assets.

Dividend Yield

A fiscal metric indicating the annual dividend payout by a company compared to its share price.

Dividends Per Share

A measure of the dividend payment per share of stock issued, calculated by dividing the total dividends paid by the company by the number of outstanding shares.