Dover Company experienced an accounting event that affected its financial statements as indicated below: $$\begin{array} { | c | c | c | c | c | c | c | c | c | c | c | }
\hline \begin{array} { c }
\text { Assets } \
-
\end{array} & = & \begin{array} { c }
\text { Liab. } \
\text { NA }
\end{array} & + & \text { Equity } & \begin{array} { c }
\text { Rev } \
\text { NA }
\end{array} & - & \begin{array} { c }
\text { Exp } \
+
\end{array} & = & \begin{array} { c }
\text { Net } \
\text { Inc. } \
-
\end{array} & \begin{array} { c }
\text { Cash } \
\text { Flow } \
\text {-OA }
\end{array} \
\hline
\end{array}$$ Which of the following accounting events could have caused these effects on Dover's statements?
A) Paid a cash dividend.
B) Earned cash revenue.
C) Borrowed money from a bank.
D) Incurred a cash expense.

Question

Dover Company experienced an accounting event that affected its financial statements as indicated below: $$\begin{array} { | c | c | c | c | c | c | c | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Assets } \
-
\end{array} & = & \begin{array} { c } 
\text { Liab. } \
\text { NA }
\end{array} & + & \text { Equity } & \begin{array} { c } 
\text { Rev } \
\text { NA }
\end{array} & - & \begin{array} { c } 
\text { Exp } \
+
\end{array} & = & \begin{array} { c } 
\text { Net } \
\text { Inc. } \
-
\end{array} & \begin{array} { c } 
\text { Cash } \
\text { Flow } \
\text {-OA }
\end{array} \
\hline
\end{array}$$ Which of the following accounting events could have caused these effects on Dover's statements?
A) Paid a cash dividend.
B) Earned cash revenue.
C) Borrowed money from a bank.
D) Incurred a cash expense.

Quizplus · Accepted Answer

The event that caused these effects is incurring a cash expense, which decreases assets (cash), increases expenses, decreases net income, and results in a negative cash flow from operating activities.

Dover Company Experienced an Accounting Event That Affected Its Financial