Which of the following transactions affects both retained earnings and net income?

Question

Quizplus · Accepted Answer

Recording revenue for services provided affects both net income and retained earnings. When revenue is recorded, it increases net income, which in turn increases retained earnings. However, the payment of cash dividends decreases retained earnings but does not affect net income. The issuance of stock in exchange for cash and the borrowing of money from a bank do not directly affect net income or retained earnings.

Which of the Following Transactions Affects Both Retained Earnings and Net