During Year 2, Millstone Company provided $6,500 of services for cash, paid cash dividends of $1,000 to owners, and paid $4,000 cash for expenses. Liabilities were unchanged. Which of the following statements accurately describes the effect of these events on the elements of the company's financial statements?
A)Assets increased by $6,500.
B)Assets increased by $1,500.
C)Stockholders' equity increased by $2,500.
D)Assets increased by $5,500.

Question

Quizplus · Accepted Answer

The cash received from services ($6,500) minus cash paid for expenses ($4,000) and dividends ($1,000) results in a net increase in assets of $1,500.

During Year 2, Millstone Company Provided $6,500 of Services for Cash