Which of These Effects of a Single Transaction on the Accounting

question 41

Multiple Choice

Which of these effects of a single transaction on the accounting equation is not possible?

• A) Increase in assets at the same time as an equal increase in equity.
• B) Decrease in assets at the same time as an equal decrease in liabilities.
• C) Increase in liabilities at the same time as an equal decrease in liabilities.
• D) Decrease in liabilities and at the same time an equal decrease in equity.

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Definitions:

Effective Yield

A measure of the return on an investment, taking into account the effect of compounding interest.

Simple Annualized

A method of calculating the return on an investment by annualizing its simple interest without accounting for compounding.

Holding-Period Return

The total return received from holding an asset or portfolio of assets over a specified period of time.

Quarterly Compounded

Interest that is calculated and added to the principal every three months, increasing the amount on which subsequent interest calculations are based.