The Transaction That Could Not Result in a Credit Balance

question 36

Multiple Choice

The transaction that could not result in a credit balance in a debtor's account is:

• A)Receipt of a deposit for work ordered
• B)Return of faulty goods by a customer after payment had been made
• C)Payment by a customer after the debt had been written off as irrecoverable
• D)Sale of goods on credit that will be paid for in the next accounting period

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Definitions:

Increase Stockholders' Equity

Refers to the growth in the equity portion of a company's balance sheet, signifying a rise in the net assets owned by shareholders.

Transactions

Financial events or exchanges that affect a company's assets, liabilities, or equity, and must be recorded in the accounting records.

Decrease Stockholders' Equity

A reduction in the value of ownership interest in a company, often due to losses, dividend payments, or share buybacks.

Income Statement

A financial document that reports a company's revenues, expenses, and net income over a specific period.