Which of the following direct effects on the accounting equation is not possible as a result of a single business transaction which impacts only two accounts? A)An increase in a liability and a decrease in an asset. B)An increase in stockholders' equity and an increase in an asset. C)An increase in an asset and a decrease in an asset. D)A decrease in stockholders' equity and a decrease in an asset.

Question

Quizplus · Accepted Answer

Transactions in accounting typically involve a dual effect on the accounting equation, but an increase in a liability and a decrease in an asset as a result of a single transaction is not directly possible because transactions that affect liabilities and assets typically involve either an increase in both (borrowing) or a decrease in both (repayment), not an increase in one and a decrease in the other.

Which of the Following Direct Effects on the Accounting Equation