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?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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