Which of the Following Transactions Affects Both Retained Earnings and Net

question 68

Multiple Choice

Which of the following transactions affects both retained earnings and net income?

• A)The payment of a cash dividend.
• B)The recording of revenue for services provided.
• C)The issuance of stock in exchange for cash.
• D)The borrowing of money from a bank.

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Definitions:

Paid in Excess

The amount paid by investors over the par value of a stock, typically recorded in the additional paid-in capital account on the balance sheet.

Common Stock

A form of corporate equity ownership, a type of security representing ownership in a corporation, entitling the holder to vote on corporate matters and receive dividends.

Earnings Per Share

The portion of a company's profit allocated to each outstanding share of common stock, serving as an indicator of a company's profitability.

Stock Split

An action by a company to divide its existing shares into multiple new shares to boost the liquidity of the shares.