BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Purchase of land
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Advertising a product
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Performing services on credit
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All of the above
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Detailed explanation-1: -Answer and Explanation: The purchase of land with cash will not change the owners’ equity in a business.
Detailed explanation-2: -The payment of a cash dividend. No, a cash dividend affects Retained Earnings but it does not affect net income because it is not an expense in the income statement. b.
Detailed explanation-3: -The main accounts that influence owner’s equity include revenues, gains, expenses, and losses.
Detailed explanation-4: -ACCRUAL BASIS ACCOUNTING Under the accrual basis of accounting, revenues are recognized when they are earned regardless of when cash is received, and most expenses are recognized when a liability is incurred regardless of when paid. However, these accruals should be recognized only if measured objectively.