Bruce Company experienced an accounting event that was recorded in the company's general journal as indicated below:

Which of the following shows how this event affects the elements of the financial statements?

A)Option A
B)Option B
C)Option C
D)Option D

Question

Bruce Company experienced an accounting event that was recorded in the company's general journal as indicated below:

Which of the following shows how this event affects the elements of the financial statements?

A)Option A 
B)Option B 
C)Option C 
D)Option D

Quizplus · Accepted Answer

The journal entry decreases assets (cash)with a credit,increases liabilities (by decreasing discount on bonds payable,a contra-liability account)with a credit,and decreases stockholders' equity (retained earnings)It increases expense (interest expense)with a debit,which decreases net income.The payment of cash for interest is reported as a cash outflow for operating activities.

Bruce Company Experienced an Accounting Event That Was Recorded in the Company's