Which of the Following Reflects the Impact of a Transaction

question 23

Multiple Choice

Which of the following reflects the impact of a transaction where $200,000 cash was invested by stockholders in exchange for stock?

• A)Assets and retained earnings each increased $200,000.
• B)Assets and revenues each increased $200,000.
• C)Stockholders' equity and revenues each increased $200,000.
• D)Stockholders' equity and assets each increased $200,000.

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Definitions:

Estimated Warranty Liability

A provision in the financial statements estimating the cost a company expects to incur under its product warranty commitments.

Customer Warranties

Promises made by sellers to buyers to repair or replace products that fail within a certain period of time after sale.

Merchandise Inventory

Merchandise inventory refers to the products a company has available for sale to customers at any given time.

Note Payable

A written promise to pay a specific sum of money to a party on demand or at a predetermined future date.