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

Question

Quizplus · Accepted Answer

Recognizing expenses incurred by a business entity will decrease its net income, which in turn will decrease its stockholders' equity. This is because expenses are subtracted from revenues to determine net income, which is a component of stockholders' equity.

Which of the Following Statements Best Describes One Effect of Recognizing