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Which of the following could represent the effects of an asset exchange transaction on a company's financial statements?

Assets=Liab.+Equity Rev. - Exp. = Net Inc. Cash Flow
A. +- = NA + NA NA - NA = NA -IA
B. +- = + + NA NA - + = + NA
C. - = NA + - NA - NA = NA -OA
D. None of these could represent the effects of an asset exchange transaction.
-Option A
-option B
-Option c
-option d

1 Answer

2 votes

Final answer:

Option A accurately represents the effects of an asset exchange transaction, where one asset increases, another decreases, and there are no immediate changes to liabilities, equity, revenue, expenses, or overall net income.

Step-by-step explanation:

The question pertains to the effects of an asset exchange transaction on a company's financial statements. In an asset exchange transaction, one asset is increased while another is decreased, with no immediate impact on liabilities or equity, revenue, expenses, or net income. Therefore, option A which shows the effects as Assets: +- (no change), Liabilities: = (no change), Equity: NA (not applicable), Revenue - Expenses: NA (not applicable), and Cash Flow: -I (decrease in investing activities), accurately represents the effects of an asset exchange transaction. This transaction would typically be recorded on the cash flow statement under investing activities if it involves cash, as the exchange of assets is an investment decision.

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