{"id":27504,"date":"2025-06-19T23:23:38","date_gmt":"2025-06-19T23:23:38","guid":{"rendered":"https:\/\/gaviki.com\/blog\/?p=27504"},"modified":"2025-06-19T23:23:39","modified_gmt":"2025-06-19T23:23:39","slug":"which-of-the-following-items-has-no-effect-on-equity","status":"publish","type":"post","link":"https:\/\/gaviki.com\/blog\/which-of-the-following-items-has-no-effect-on-equity\/","title":{"rendered":"Which of the following items has no effect on equity"},"content":{"rendered":"\n<p>Which of the following items has no effect on equity a. wages accrued b. revenue c. land purchase d. dividends<\/p>\n\n\n\n<p><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\"><strong>The correct answer and explanation is:<\/strong><\/mark><\/p>\n\n\n\n<p><strong>Correct Answer: c. Land purchase<\/strong><\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Explanation (Approx. 300 Words):<\/strong><\/h3>\n\n\n\n<p>Equity in accounting refers to the residual interest in the assets of a business after deducting liabilities. It essentially represents the ownership value held by shareholders or owners of the business. Various transactions can increase or decrease equity, but <strong>not all business transactions<\/strong> have a direct impact on it.<\/p>\n\n\n\n<p>Let\u2019s evaluate each option:<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><strong>a. Wages accrued:<\/strong><br>This represents an expense that has been incurred but not yet paid. Expenses reduce <strong>net income<\/strong>, which in turn reduces <strong>retained earnings<\/strong>, a component of equity.<br>\u2705 <strong>Effect on equity<\/strong>: <strong>Yes<\/strong>, it reduces equity.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><strong>b. Revenue:<\/strong><br>Revenue increases <strong>net income<\/strong>, which contributes to <strong>retained earnings<\/strong>. Since retained earnings are a key part of equity, recognizing revenue <strong>increases equity<\/strong>.<br>\u2705 <strong>Effect on equity<\/strong>: <strong>Yes<\/strong>, it increases equity.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><strong>c. Land purchase:<\/strong><br>Purchasing land is a <strong>swap between assets<\/strong>\u2014cash decreases, land (a non-current asset) increases. Since it <strong>does not involve income, expenses, or distributions<\/strong>, equity remains unchanged.<br>\u274c <strong>Effect on equity<\/strong>: <strong>No<\/strong>, it <strong>has no effect<\/strong> on equity.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><strong>d. Dividends:<\/strong><br>Dividends represent a <strong>distribution of profits<\/strong> to shareholders. Paying dividends <strong>reduces retained earnings<\/strong>, which <strong>reduces equity<\/strong>.<br>\u2705 <strong>Effect on equity<\/strong>: <strong>Yes<\/strong>, it decreases equity.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Conclusion:<\/strong><\/h3>\n\n\n\n<p>Among the options given, only the <strong>purchase of land<\/strong> does <strong>not affect equity<\/strong>. It is a balance sheet transaction that changes the composition of assets but not the total amount of equity.<\/p>\n\n\n\n<p>Hence, the correct answer is:<br>\ud83d\udc49 <strong>c. Land purchase<\/strong>.<\/p>\n\n\n\n<p><a href=\"https:\/\/www.numerade.com\/ask\/question\/which-of-the-following-items-has-no-effect-on-equity-a-wages-accrued-b-revenue-c-land-purchase-d-dividends-30387\/\" target=\"_blank\" rel=\"noopener\"><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Which of the following items has no effect on equity a. wages accrued b. revenue c. land purchase d. dividends The correct answer and explanation is: Correct Answer: c. Land purchase Explanation (Approx. 300 Words): Equity in accounting refers to the residual interest in the assets of a business after deducting liabilities. It essentially represents [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-27504","post","type-post","status-publish","format-standard","hentry","category-quiz-questions"],"_links":{"self":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts\/27504","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/comments?post=27504"}],"version-history":[{"count":1,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts\/27504\/revisions"}],"predecessor-version":[{"id":27505,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts\/27504\/revisions\/27505"}],"wp:attachment":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/media?parent=27504"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/categories?post=27504"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/tags?post=27504"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}