Which of the following statements best describes one effect of recognizing expenses incurred by a business entity?
A)Assets will increase.
B)Liabilities will decrease.
C)Stockholders' equity will increase.
D)Stockholders' equity will decrease.

Question

Quizplus · Accepted Answer

Recognizing expenses means recording them as a decrease in stockholders' equity, as they represent a decrease in the company's net assets. This is because expenses reduce profits, which in turn reduce retained earnings and ultimately stockholders' equity.

Which of the Following Statements Best Describes One Effect of Recognizing