Question

An accountant has debited an asset account for $800 and credited a liability account for $700. Which of the following would be an incorrect way to complete the recording of the transaction?

A) Credit an asset account for $100

B) Credit another liability account for $100

C) Credit a stockholders' equity account for $100

D) Debit a stockholders' equity account for $100

Answer 1

An incorrect way to complete the recording of the transaction would be to credit a stockholders' equity account for $100.

Step-by-step explanation:

An incorrect way to complete the recording of the transaction would be to Credit a stockholders' equity account for $100. This is because stockholders' equity represents the owners' claims to the assets of the company, and it is not affected by the initial transaction of debiting an asset account and crediting a liability account. Stockholders' equity is typically affected by other transactions such as investments or retained earnings.