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27 March, 07:45

Which of the following transactions would cause a decrease in both assets and stockholders' equity?

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  1. 27 March, 11:20
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    This question is incomplete as there are no choices to select the correct one. However, I will explain what would cause a decrease in both assets and equity below;

    Explanation:

    To answer this question, you will identify a transaction that affects both the asset side and equity side of a balance sheet. In this case, we consider a decrease in both. Example is; repurchase of shares using cash. This occurs when a company buys back their shares from shareholders. This will decrease cash (which is a current asset) since shareholders will be paid and they will give back their shares. After the repurchase, there will be a decrease in the number of outstanding shares hence decreasing the total book value of equity.
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