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)Equity increased by $2,500.
D)Assets increased by $5,500.

Question

Quizplus · Accepted Answer

Cash,an asset,increased by $1,500 (calculated as receipts of $6,500 -payment of $1,000 - payment of $4,000).Equity also increased by $1,500 (calculated as revenue of $6,500 - dividends of $1,000 - expenses of $4,000).

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