Which of the following types of transaction will result in an accounting entry that will decrease the recorded equity of a medical insurance company?
A) Paying cash for land
B) Borrowing money from a bank
C) Selling new shares of common stock to stockholders for cash
D) Salary expenses

Question

Quizplus · Accepted Answer

Salary expenses are a type of operating expense, which will decrease the recorded equity of a medical insurance company. The other options (A, B, and C) either do not affect equity or increase it. Paying cash for land will reduce the amount of cash the company has, but will increase the value of its assets, leaving equity unchanged. Borrowing money will increase the company's liabilities, but again, equity will not be directly affected. Selling new shares of common stock will increase the amount of equity in the company.

Which of the Following Types of Transaction Will Result in an Accounting