Which of the Following Items Has No Effect on Stockholders

question 143

Multiple Choice

Which of the following items has no effect on stockholders' equity?

• A)Receipt of cash owed to the business (accounts receivable)
• B)Sale of a service
• C)Payment of an expense
• D)Dividend distributions

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Definitions:

Present Value

The current value of a future sum of money or stream of cash flows given a specified rate of return.

Depreciation Tax Shield

The reduction in taxable income for businesses that results from claiming depreciation expenses, thereby lowering tax liabilities.

Break-Even Lease Payment

The lease payment amount at which the cost of leasing equals the cost of owning, resulting in no net profit or loss.

Straight-Line Method

A technique in accounting for evenly spreading the cost of an asset over its useful life.