Indicate whether each of the following types of transactions will either (a) increase stockholders' equity or (b) decrease stockholders' equity: 1. Issued common stock in exchange for cash. 2. Received cash for services performed for customers. 3. Paid business expenses. 4. Paid dividends

Following would be the journal entries and their effect on stockholders equity

1. Issued common stock for cash

Cash A/C                                  Dr.

    To Common Stock

This transaction would increase stockholder's equity as common stock would increase.

2. Received cash for services provided

   Cash A/C                              Dr.

       To Service Revenue

(being cash received against services provided)

  This transaction would increase stockholder's equity as net income would increase

3. Paid business expenses

   Expenses   A/C                            Dr.

       To Cash A/C

(Being expenses paid recorded)

This would reduce stockholder's equity as net income would reduce.

4. Paid Dividends

  Retained Earnings                       Dr.

       To Dividend Payable A/C

(Being declaration of dividend recorded)    

   Dividend Payable A/C                 Dr.

        To Cash A/C

(Being dividends paid recorded)

This would reduce stockholder's equity as reserves and surplus would reduce.

answer; i believe that the correct answer is ( owners investment)