Which of the following is a claims exchange transaction?
A)Purchased machine for cash.
B)Issued common stock.
C)Invested cash in an interest earning account.
D)Recognized revenue earned on a contract where the cash had been collected at an earlier date.

Question

Quizplus · Accepted Answer

Recognizing revenue earned on a contract where the cash had been collected at an earlier date is a claims exchange transaction that decreases liabilities (unearned revenue) and increases equity (revenue increases retained earnings). Purchasing a machine for cash and investing in an interest earning account are asset exchange transactions. Issuing common stock is an asset source transaction.

Which of the Following Is a Claims Exchange Transaction