A transaction caused a $1,000 decrease in both total assets and total owners\' e

Question

A transaction caused a $1,000 decrease in both total assets and total owners' equity. This transaction could have been:

Purchase of Treasury Stock for $1,000 in cash.

Investment of $1,000 cash in the business by selling additional shares of common stock.

Purchase of office equipment of $1,000 cash.

Purchase of office equipment for $9,000, paying $8,000 cash and issuing a note payable for the balance.

None of the above.

Purchase of Treasury Stock for $1,000 in cash.

Investment of $1,000 cash in the business by selling additional shares of common stock.

Purchase of office equipment of $1,000 cash.

Purchase of office equipment for $9,000, paying $8,000 cash and issuing a note payable for the balance.

None of the above.

Explanation / Answer

Answer :

Option : A

Since purchase of treasury stock leads to decrease in cash which is a part of the Total assets and teasury stock shall be reduced from the stock holders equity which leads to decrease in total owners equity.

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