Which of the following transactions causes a decrease in stockholders' equity?

Question

Quizplus · Accepted Answer

Paying dividends to stockholders reduces the amount of retained earnings and therefore decreases stockholders' equity. The other transactions have no direct effect on stockholders' equity. Borrowing increases liabilities but also increases assets, so there is no net effect on equity. Providing services on account increases both assets and liabilities, and purchasing office equipment decreases cash but increases assets, so again there is no direct effect on equity.

Which of the Following Transactions Causes a Decrease in Stockholders