What Effect Does This Journal Entry Have on the Accounts

question 40

Multiple Choice

What effect does this journal entry have on the accounts?

• A)Decrease accounts payable,increase cash
• B)Increase cash,decrease accounts payable
• C)Increase accounts payable,increase cash
• D)Decrease accounts payable,decrease cash

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Definitions:

Adverse Selection

Adverse selection is a situation in financial markets where there is asymmetric information leading buyers or sellers to make decisions that can result in the market becoming skewed or unbalanced, often seen in insurance markets.

Insurance

A contract represented by a policy, where an individual or entity receives financial protection or reimbursement against losses from an insurance company.

Risk Averse

A description of an individual's or entity's preference to avoid risk, often by choosing options with certain outcomes over those with higher degrees of uncertainty.

Insurance

A form of risk management primarily used to hedge against the risk of a contingent or uncertain loss.