Which of the following is correct when a corporation uses cash to pay for an expense?
A) Total assets will decrease.
B) Retained earnings will decrease.
C) Owners' equity will decrease.
D) All three of the above statements are correct.

Question

Quizplus · Accepted Answer

When a corporation uses cash to pay for an expense, total assets decrease because cash is an asset. Retained earnings decrease because expenses reduce net income, which in turn reduces retained earnings. Owners' equity decreases because it is affected by changes in retained earnings.

Which of the Following Is Correct When a Corporation Uses