A company's total assets increased during the period while its liabilities and common stock were unchanged.No dividends were declared or paid during the period.Which of the following would explain this situation?
A)Revenues were greater than expenses during the period.
B)Retained earnings were less than net income during the period.
C)No dividends were paid during the period.
D)The company must have purchased assets with cash during the period.

Question

Quizplus · Accepted Answer

Assets = Liabilities + Stockholders' equity
Assets = Liabilities + Common stock + Retained earnings
If a company's total assets increased while liabilities and common stock were unchanged,retained earnings must have increased.In order for retained earnings to increase,the company must have reported net income.In other words,its revenues must have been greater than its expenses.

A Company's Total Assets Increased During the Period While Its