Problem 1.7 Financial Accounting WHAT IS THE EFFECT ON EQUITY WHEN A BUSINESS OWNER WITHDRAWS CASH FORPERSONAL USE?A) EQUITY INCREASESB) EQUITY DECREASESC) NO EFFECT ON EQUITYD) ASSETS INCREASE.

Explanation of Equity:Equity, also known as owner's equity or net worth, represents the owner's…

Answered: WHAT IS THE EFFECT ON EQUITY WHEN A…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter11: The Statement Of Cash Flows

Section: Chapter Questions

Problem 5MCQ

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Explanation
What effect will the cash payment of an account payable have on the Balance Sheet? Group of answer choices Decrease an asset and decrease stockholders’ equity Decrease an asset and decrease a liability Increase an asset and increase a liability Increase one asset and decrease another asset
An investment of cash by stockholders into the business willa. decrease total assets.b. increase stockholders’ equity.c. have no effect on total assets.d. decrease total liabilities.
What types of transactions reduce owners equity? What types of transactions reduce retained earnings? What do they have in common?
Which of the following represents a source of cash in the investing section? A. sale of investments B. depreciation expense C. decrease in accounts receivable D. decrease in bonds payable
Exchanges of assets for assets have what effect on equity? A. increase equity B. may have no impact on equity C. decrease equity D. There is no relationship between assets and equity.
Assets are a.always lower than liabilities b.equal to liabilities less stockholders' equity c.the same as expenses because they are acquired with cash d.financed by the stockholders and/or creditors
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Comment critically on the following statement: ‘Equity only increases or decreases as a result of the owners putting more cash into the business or taking some out.’
How would the issuance of common stock for cash affect the accounting equation?a. Increase assets and increase stockholders’ equityb. Increase liabilities and decrease stockholders’ equityc. Increase assets and increase liabilitiesd. Decrease assets and decrease liabilities
Which of the following is a cash inflow? a. an increase in dividend payment b. a decrease in accrued liabilities c. a decrease in accounts receivable d. a decrease in accounts payable
Consider the following event: Creditor takes stock in the company in exchange for retiring debt. Which of the following combination of changes in the accounting equation describes the given event? a. Liabilities decrease; Owners' equity increase b. Assets decrease; Liabilities decrease c. Assets decrease; Owners' equity decrease d. Assets increase; Assets decrease e. Assets increase; Liabilities increase f. Assets increase; Owners' equity increase

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WHAT IS THE EFFECT ON EQUITY WHEN A BUSINESS OWNER WITHDRAWS CASH FOR PERSONAL USE? A) EQUITY INCREASES B) EQUITY DECREASES C) NO EFFECT ON EQUITY D) ASSETS INCREASE.