A transaction caused a $1,000 decrease in both total assets and total owners\' e
ID: 2396993 • Letter: A
Question
A transaction caused a $1,000 decrease in both total assets and total owners' equity. This transaction could have been:
Purchase of Treasury Stock for $1,000 in cash.
Investment of $1,000 cash in the business by selling additional shares of common stock.
Purchase of office equipment of $1,000 cash.
Purchase of office equipment for $9,000, paying $8,000 cash and issuing a note payable for the balance.
None of the above.
a.Purchase of Treasury Stock for $1,000 in cash.
b.Investment of $1,000 cash in the business by selling additional shares of common stock.
c.Purchase of office equipment of $1,000 cash.
d.Purchase of office equipment for $9,000, paying $8,000 cash and issuing a note payable for the balance.
e.None of the above.
Explanation / Answer
Answer :
Option : A
Since purchase of treasury stock leads to decrease in cash which is a part of the Total assets and teasury stock shall be reduced from the stock holders equity which leads to decrease in total owners equity.