Question

Which of the following transactions would cause a decrease in both assets and stockholders' equity? A) Paying advertising for the current month. B) Purchasing office equipment on account. C) Paying insurance premium for the next two years. D) Providing services to customers on account.

Answer 1

Answer:

A) Paying advertising for the current month

Explanation:

Stockholder equity is the remaining amount of assets available to shareholder after all the liabilities have been paid. Incurring an advertising budget for that month again is going to reduce their equity and also asset likewise because it is an expense.