A sale of inventory results in a(n)________ in stockholders' equity equal to the selling price of the inventory.A sale of inventory also results in a(n)________ in stockholders' equity equal to the cost of the inventory sold.
A) decrease; increase
B) increase; increase
C) increase; decrease
D) decrease; decrease

Question

Quizplus · Accepted Answer

The sale of inventory results in an increase in stockholders' equity equal to the selling price of the inventory (revenue), but also results in a decrease in stockholders' equity equal to the cost of the inventory sold (expense). Therefore, the correct choice is C, where there is an increase in stockholders' equity (revenue) and a decrease in stockholders' equity (expense).

A Sale of Inventory Results in A(n)________ in Stockholders' Equity