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

Question

Quizplus · Accepted Answer

Recording revenue for services provided affects both retained earnings and net income. Revenue increases net income, which in turn increases retained earnings. The other transactions listed do not affect both retained earnings and net income. The payment of a cash dividend reduces retained earnings but has no effect on net income. The issue of stock in exchange for cash increases equity but has no effect on net income. The borrowing of money from a bank increases liabilities but has no effect on net income or retained earnings.

Which of the Following Transactions Affects Both Retained Earnings and Net