Transaction Analysis and the Accounting Equation Have Been Used to Record

question 52

Multiple Choice

Transaction analysis and the accounting equation have been used to record several transactions for a company.The transactions are now recorded on a multi-column spreadsheet.When preparing an income statement with this spreadsheet,which column would be used?

• A)Cash
• B)Accounts Payable
• C)Dividends
• D)Retained Earnings

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Definitions:

Double-Entry Accounting

An accounting method that involves making two entries for every transaction, to maintain the balance of the accounting equation.

Debits and Credits

Fundamental elements of double-entry bookkeeping, where debits represent increases in assets or expenses and credits signify increases in liabilities, equity, or income.

Transaction

An agreement or exchange between two or more parties that is recorded and has a financial impact on the business.

T-Account

A graphical representation of a ledger account, showing two sides for debits and credits, used in accounting.