Which of the following transactions results in an increase in both net income and stockholders' equity?
A)Paying cash to acquire a six-month insurance policy.
B)Collecting cash from a customer for services to be provided in the future.
C)The accrual of interest expense year-end.
D)Adjustment of the unearned revenue account for revenue earned during the perioD.Adjusting unearned revenue for revenue earned results in a credit to revenue and a debit to unearned revenue.This decreases liabilities and increases net income and stockholders' equity.

Question

Quizplus · Accepted Answer

Adjusting unearned revenue for revenue earned results in a credit to revenue and a debit to unearned revenue. This decreases liabilities and increases net income and stockholders' equity. Therefore, option D is the correct choice as it leads to an increase in both net income and stockholders' equity.

Which of the Following Transactions Results in an Increase in Both