Dover Company experienced an accounting event that affected its financial statements as indicated below: Which of the following accounting events could have caused these effects on Dover's statements?
A)Paid a cash dividend.
B)Earned cash revenue.
C)Borrowed money from a bank.
D)Incurred a cash expense.

Question

Dover Company experienced an accounting event that affected its financial statements as indicated below:  Which of the following accounting events could have caused these effects on Dover's statements?
A)Paid a cash dividend. 
B)Earned cash revenue. 
C)Borrowed money from a bank. 
D)Incurred a cash expense.

Quizplus · Accepted Answer

Incurring a cash expense would decrease assets (cash) and decrease equity (retained earnings). It would increase expenses and decrease net income, and would be reported as a cash outflow for operating activities on the statement of cash flows.

Dover Company Experienced an Accounting Event That Affected Its Financial