QuestionFebruary 2, 2026

a. Stockholders invested cash in the business for common stock. b. Paid a cash dividend. c. Received cash from a customer who had previously been billed for services performed.

a. Stockholders invested cash in the business for common stock. b. Paid a cash dividend. c. Received cash from a customer who had previously been billed for services performed.
a. Stockholders invested cash in the business for common stock.
b. Paid a cash dividend.
c. Received cash from a customer who had previously been billed for services performed.

Solution
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Answer

a. Increase in Cash (Asset) and Common Stock (Equity) ### b. Decrease in Cash (Asset) and Retained Earnings (Equity) ### c. Increase in Cash (Asset) and Decrease in Accounts Receivable (Asset) Explanation 1. Identify the Type of Transaction for (a) Stockholders investing cash for common stock is an equity transaction. It increases both cash (asset) and common stock (equity). 2. Identify the Type of Transaction for (b) Paying a cash dividend decreases cash (asset) and retained earnings (equity). 3. Identify the Type of Transaction for (c) Receiving cash from a customer for previously billed services increases cash (asset) and decreases accounts receivable (asset).

Explanation

1. Identify the Type of Transaction for (a)<br /> Stockholders investing cash for common stock is an equity transaction. It increases both cash (asset) and common stock (equity).<br /><br />2. Identify the Type of Transaction for (b)<br /> Paying a cash dividend decreases cash (asset) and retained earnings (equity).<br /><br />3. Identify the Type of Transaction for (c)<br /> Receiving cash from a customer for previously billed services increases cash (asset) and decreases accounts receivable (asset).
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