A Transaction Caused an Increase in Both Assets and Equity

question 61

Multiple Choice

A transaction caused an increase in both assets and equity. This transaction could have been:

• A) A sale of service to a customer producing revenue.
• B) Sale of land for a price less than its cost.
• C) Borrowing money from a bank.
• D) Sale of land for cash at a price equal to its cost.

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Definitions:

Trading Security

A financial instrument that is bought and sold for the purpose of generating profits on short-term fluctuations in price.

Available-for-sale Security

A debt or equity security not classified as a held-to-maturity or trading security, which can be sold in the short term for capital gains.

Net Income

The total profit of a company after all expenses and taxes have been subtracted from total revenue.

Stockholders' Equity

The residual interest in the assets of a corporation that remains after deducting its liabilities.