Final answer:
The transaction will increase assets and increase stockholders' equity.
Step-by-step explanation:
The correct answer is D. increase assets and increase stockholders' equity.
This transaction increases assets because advertising services are an economic resource that Rent-a-Swag will benefit from in the future. It also increases stockholders' equity because the advertising services will generate revenue for the company, which will increase its overall value.
Here's an example: Let's say Rent-a-Swag purchases $5,000 of advertising services to promote their clothing rental business. The advertising will attract more customers, resulting in increased revenue and profits. As a result, Rent-a-Swag's assets (such as cash and accounts receivable) will increase, and its stockholders' equity (the owners' claim on the company's assets) will also increase.