Which of the Following Transactions Would Decrease an Asset and Decrease

question 99

Multiple Choice

Which of the following transactions would decrease an asset and decrease stockholders' equity?

• A)payment of an accounts payable
• B)performance of a service for a client on account
• C)borrowing money from the bank for thirty days
• D)declaration and payment of a dividend to the shareholders

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Definitions:

Diseconomies of Scale

The phenomenon where, as a firm scales up its production, the per unit cost starts to increase, typically due to inefficiencies.

Economies of Scale

Economies of scale occur when a company reduces costs per unit due to an increase in production, typically achieved through operational efficiency and larger volume production.

Constant Returns to Scale

A situation in production where increasing all inputs by a certain factor results in output increasing by the same factor, indicating proportionate scalability.