1. (a) How does the payment of dividends of $15,000 affect the three elements of the accounting equation? (b) Is net income affected by the payment of dividends? Explain. 2. Assume that Esquire Consulting erroneously recorded the payment of $30,000 of dividends as salary expense. (a) How would this error affect the equality of the accounting equation? (b) How would this error affect the income statement, retained earnings statement, balance sheet, and statement of cash flows?
1. (a) How does the payment of dividends of $15,000 affect the three elements of the accounting equation? (b) Is net income affected by the payment of dividends? Explain. 2. Assume that Esquire Consulting erroneously recorded the payment of $30,000 of dividends as salary expense. (a) How would this error affect the equality of the accounting equation? (b) How would this error affect the income statement, retained earnings statement, balance sheet, and statement of cash flows?
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter2: Basic Accounting Systems: Cash Basis
Section: Chapter Questions
Problem 7CDQ
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1. (a) How does the payment of dividends of $15,000 affect the three elements of the accounting equation? (b) Is net income affected by the payment of dividends? Explain.
2. Assume that Esquire Consulting erroneously recorded the payment of $30,000 of dividends as salary expense. (a) How would this error affect the equality of the accounting equation? (b) How would this error affect the income statement, retained earnings statement, balance sheet, and statement of cash flows?
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