[RRGOO7]

Which of the following would not cause stockholders equity to change?

Sale of additional stock to investors
Earning revenue for services performed
Cash payment for dividends previously declared
Declaration of a cash dividend to stockholders

???

[radix]

Ask your professor.

[jopa489]

Originally Posted by radix

Ask your professor.

I'm not giving you the answer, but that's an easy one. Which one doesn't have any direct relation to equity? One of those is clearly the odd man out.

[jun]

don't need to be an expert to answer this one...

just think it through with the journal entries.

I like how everyone said it was an easy one yet no one gave an answer

[bunnn]

Originally Posted by RRGOO7

Which of the following would not cause stockholders equity to change?

Sale of additional stock to investors <- investors = stockholder
Earning revenue for services performed
Cash payment for dividends previously declared <- dividends are paid to....stockholders
Declaration of a cash dividend to stockholders <- says stockholder here..

???

so the answer must be!?

[burningchicken]

Originally Posted by bunnn

so the answer must be!?

ummm im pretty sure its not.
but i sure do wish my girlfriend's bra size was a D cup...

[Seminole]

Originally Posted by burningchicken

ummm im pretty sure its not.
but i sure do wish my girlfriend's bra size was a D cup...

You're wrong too.

I'll break down each one.

A) Sale of additional stock obviously increases equity.
B) Receipts of revenue increase equity.
C) When you pay a dividend previously declared, you decrease dividends payable, and decrease cash, no effect on equity.
D) When you declare a dividend, you debit dividend expense (reduces equity) and credit dividends payable.

So the answer is C.

To the OP, go read the book next time. You aren't gonna have E90post at your service on a test or on the job...

[bunnn]

Originally Posted by Seminole

You're wrong too.

I'll break down each one.

A) Sale of additional stock obviously increases equity.
B) Receipts of revenue increase equity.
C) When you pay a dividend previously declared, you decrease dividends payable, and decrease cash, no effect on equity.
D) When you declare a dividend, you debit dividend expense (reduces equity) and credit dividends payable.

So the answer is C.

To the OP, go read the book next time. You aren't gonna have E90post at your service on a test or on the job...

with the help of a bb or iphone..he just might!

I'm pretty sure it's not B because in the simplest way I can put it, revenue would increase income-> increase retained earnings-> increase equity. Obviously not A.

Seminole hit it on the nail

[silvergray545]

Originally Posted by Seminole

You're wrong too.

I'll break down each one.

A) Sale of additional stock obviously increases equity.
B) Receipts of revenue increase equity.
C) When you pay a dividend previously declared, you decrease dividends payable, and decrease cash, no effect on equity.
D) When you declare a dividend, you debit dividend expense (reduces equity) and credit dividends payable.

So the answer is C.

To the OP, go read the book next time. You aren't gonna have E90post at your service on a test or on the job...

We just went over this in class last week. I haven't had much time to review this but this is what I know off the top of my head. Correct me if I'm wrong.

The answer is C.

Assets = Liabilities + Stockholder's Equity

Cash is an Asset. Dividends payable is a Liability. Debit dividends payable, credit cash. Stockholder's Equity is untouched since the dividend was previously declared.

[Seminole]

Originally Posted by silvergray545

We just went over this in class last week. I haven't had much time to review this but this is what I know off the top of my head. Correct me if I'm wrong.

The answer is C.

Assets = Liabilities + Stockholder's Equity

Cash is an Asset. Dividends payable is a Liability. Debit dividends payable, credit cash. Stockholder's Equity is untouched since the dividend was previously declared.

Yup, that's correct.

[silvergray545]

Awesome! I'm actually really enjoying my accounting class. I was really intimidated by it at first. Lol

[burningchicken]

But wouldnt D have no effect on the SE?
Its just a declaration. Im assuming that this is accrual based accounting. If its a declaration there hasn't been a transaction yet. The other choices say Sale, earning, and payment which indicate a transaction. In D there hasnt been a transaction so the SE would not change.
But im just a freshman in principles so im most likely wrong..

[Seminole]

Originally Posted by burningchicken

But wouldnt D have no effect on the SE?
Its just a declaration. Im assuming that this is accrual based accounting. If its a declaration there hasn't been a transaction yet. The other choices say Sale, earning, and payment which indicate a transaction. In D there hasnt been a transaction so the SE would not change.
But im just a freshman in principles so im most likely wrong..

You are all confused about accrual transactions. Accrual accounting (in a dumbed down explanation) is to record the effect of a transaction before you realize the benefit/liability of it.

Think about a sale. Normally, when you sell someone something for cash you record a transaction:

Cash....100

Inventory....100

But with accrual accounting, you can record a transaction without having actually receiving the cash. Like with accounts receivable. Say we make the same sale as before, but the customer makes us a promise to pay within a week. The transaction would be:

A/R....100

Inventory....100

With accrual accounting we record the customer's promise to pay as an asset, a receivable. When the customer actually pays, we record the reciept of cash:

Cash....100

A/R....100

So back to your question, in letter D the company declares a dividend. When they declare it they record the following transaction (lets assume the dividend is $400):

Dividend Expense....400

Dividend Payable....400

By doing this we are accruing the expense for the payment of the dividend. Since expense is a equity account, it effects Stockholders' Equity.

When we pay the actual dividend (Choice C), we record the following:

Dividend Payable....400

Cash.................400

Neither of those accounts effect equity. So C is the answer.

I hope that explains it.

[Peanuto]

Igor?

[addy85]

da fuck?