Which of the following statements regarding a company's operating activities is true?
A)Revenues decrease stockholders' equity.
B)Expenses increase stockholders' equity.
C)Expenses decrease stockholders' equity.
D)Dividends decrease assets.

Question

Quizplus · Accepted Answer

Expenses are costs that a company incurs in order to generate revenue. When expenses are subtracted from revenue, the result is net income, which ultimately increases stockholders' equity. Therefore, expenses decrease stockholders' equity only in the sense that they reduce net income.

Which of the Following Statements Regarding a Company's Operating Activities