If a Transaction Causes Total Assets of the Company to Increase

question 47

True/False

If a transaction causes total assets of the company to increase by $5,000 and total liabilities to increase by $3,000,then stockholders' equity increases by $8,000.

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Definitions:

Recognize Assets

The process of recording an item in the financial statements as an asset, acknowledging its probable future economic benefits.

Derecognize

The removal of an asset or liability from a company's financial statements, often due to it being sold, fully depreciated, or disposed of.

Reclassify Items

The process of moving accounting entries from one ledger or category to another to correct or clarify financial statements during the preparation process.

FASB-IASB Convergence

The ongoing efforts by the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) to align their accounting standards and practices.