Rialto Company experienced an accounting event that affected its financial statements as indicated below: $$\begin{array} { | c | c | c | c | c | c | c | c | c | c | c | }
\hline \begin{array} { c }
\text { Assets } \
+
\end{array} & = & \begin{array} { c }
\text { Liab. } \
\text { NA }
\end{array} & + & \begin{array} { c }
\text { Equity } \
+
\end{array} & \begin{array} { c }
\text { Rev } \
+
\end{array} & - & \begin{array} { c }
\text { Exp } \
\text { NA }
\end{array} & = & \begin{array} { c }
\text { Net } \
\text { Inc. } \
+
\end{array} & \begin{array} { c }
\text { Cash } \
\text { Flow } \
+ \mathrm { OA }
\end{array} \
\hline
\end{array}$$ Which of the following accounting events could have caused these effects on Rialto's statements?
A) Paid a cash dividend.
B) Earned cash revenue.
C) Borrowed money from a bank.
D) None of these.

Question

Rialto Company experienced an accounting event that affected its financial statements as indicated below: $$\begin{array} { | c | c | c | c | c | c | c | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Assets } \
+
\end{array} & = & \begin{array} { c } 
\text { Liab. } \
\text { NA }
\end{array} & + & \begin{array} { c } 
\text { Equity } \
+
\end{array} & \begin{array} { c } 
\text { Rev } \
+
\end{array} & - & \begin{array} { c } 
\text { Exp } \
\text { NA }
\end{array} & = & \begin{array} { c } 
\text { Net } \
\text { Inc. } \
+
\end{array} & \begin{array} { c } 
\text { Cash } \
\text { Flow } \
+ \mathrm { OA }
\end{array} \
\hline
\end{array}$$ Which of the following accounting events could have caused these effects on Rialto's statements?
A) Paid a cash dividend.
B) Earned cash revenue.
C) Borrowed money from a bank.
D) None of these.

Quizplus · Accepted Answer

Earned cash revenue increases assets (cash) and equity (revenue).

Rialto Company Experienced an Accounting Event That Affected Its Financial