Which of the following transactions results in an increase in both net income and stockholders' equity?
A)Paying cash to acquire a six-month insurance policy.
B)Collecting cash from a customer for services to be provided in the future.
C)The accrual of interest expense year-end.
D)Adjustment of the unearned revenue account for revenue earned during the period.

Question

Quizplus · Accepted Answer

Adjusting the unearned revenue account for revenue earned during the period will result in an increase in both net income (as the revenue is recognized) and stockholders' equity (as the revenue earned increases retained earnings). None of the other transactions directly impact both net income and stockholders' equity in this way.

Which of the Following Transactions Results in an Increase in Both