Which of the following is a claims exchange transaction?
A)Recognized revenue earned on a contract where the cash had been collected at an earlier date.
B)Issued common stock.
C)Invested cash in an interest earning account.
D)Purchased machine for cash.

Question

Quizplus · Accepted Answer

Recognizing revenue earned on a contract where the cash had been collected at an earlier date is a claims exchange transaction that decreases liabilities (unearned revenue)and increases equity (revenue increases retained earnings).Purchasing a machine for cash and investing in an interest earning account are asset exchange transactions.Issuing common stock is an asset source transaction.

Which of the Following Is a Claims Exchange Transaction