Which of the following types of transaction will result in an accounting entry that will increase the recorded equity of a medical insurance company?
A) Paying wages of employees for the month
B) Borrowing money from a bank
C) Paying dividends to the owners
D) Charging medical premiums to people who have signed up to be insured

Question

Quizplus · Accepted Answer

Charging medical premiums to people who have signed up to be insured will result in an increase in the recorded revenue or income of the medical insurance company, which will ultimately increase the equity of the company. Paying wages of employees (A) will result in a decrease in equity through the expense of paying the employees. Borrowing money (B) will not affect equity directly, but it will result in a liability for the company. Paying dividends (C) will reduce equity, as the company is distributing a portion of its profits to its owners.

Which of the Following Types of Transaction Will Result in an Accounting