Consider the following event: Creditor takes stock in the company inexchange for retiring debt. Which of the following combination ofchanges in the accounting equation describes the given event?a. Liabilities decrease; Owners' equity increaseb. Assets decrease; Liabilities decreasec. Assets decrease; Owners' equity decreased. Assets increase; Assets decreasee. Assets increase; Liabilities increasef. Assets increase; Owners' equity increase

Correct Answer: a. Liabilities decrease; Owners' equity increase Explanation:When a creditor takes…

Answered: Consider the following event: Creditor…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter16: Statement Of Cash Flows

Section: Chapter Questions

Problem 13MC: Which of the following would be included in the financing section? A. loss on sale of investments B....

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Which of the following would trigger a subtraction in the indirect operating section? A. gain on sale of investments B. depreciation expense C. decrease in accounts receivable D. decrease in bonds payable
What is the impact on the accounting equation when stock is issued, in exchange for assets? A. both sides increase B. both sides decrease C. only the Asset side changes D. neither side changes
Which of the following decreases owners equity? A. investments by owners B. losses C. gains D. short-term loans
When do companies recognize gains and losses from the extinguishment of debt? Where are the gains and losses disclosed on the income statement?
Which of the following is not a way to manage earnings? A. Change the method for bad debt estimation. B. Change the figure for the uncollectible percentage. C. Under the balance sheet aging method, change the past-due categories. D. Change the dates of common stock issuance.
Four financial statements are usually prepared for a business. The statement of cash flows is usually prepared last. The statement of stockholders' equity (SSE), the balance sheet (B), and the income statement (1) are prepared in a certain order to obtain information needed for the next statement. In what order are these three statements prepared? Oa. B, I, SSE Ob. SSE, I, B Oc. B, SSE, I Od. 1, SSE, B
Explain whether each of the following balance sheet items increases, reduces, or has no directeffect on a company’s ability to pay its obligations as they come due. Explain your reasoning.a. Cash.b. Accounts Payable.c. Accounts Receivable.d. Capital Stock.
May you please help me determine the effect on the accounting equation?
If an asset is purchased on credit. what is the effect on the accounting equation? a) Assets increase; liabilities increase b) Assets decrease: equity decreases c) Liabilities decrease: equity increases d) No effect on the accounting equation
When a company borrows money from the bank, what is the impact on the accounting equation? Group of answer choices Assets decrease and labilities increase Assets increase and liabilities increase Assets decrease and liabilities decrease Assets increase and liabilities decrease
increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result in increases in equity, other than those resulting to equity participants. Liabilities Equity Income O Assets
The following information can be obtained by examining a company's balance sheet and income statement information: a. Increases in current asset account balances, other than cash. b. Decreases in current asset account balances, other than cash. c. Cash outflows to purchase long-term assets. d. Decreases in current liability account balances. e. Cash outflows to repay long-term debt. f. Gains recognized on the sale of long-term assets. g. Noncash expenses (e.g., depreciation). h. Cash outflows to purchase treasury stock. i. Increases in current liability account balances. j. Cash inflows from the sale of long-term assets. k. Cash inflows from the issue of common stock. I. Cash outflows to pay dividends. m. Losses incurred from the sale of long-term assets. n. Cash inflows from the issue of long-term debt. Required For each item, indicate whether it would be used in the computation of net cash flows from operating, investing, or financing activities. Also, indicate whether the item would…

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