The payment of a liability in cash will decrease stockholder's equity Deposits in transit are shown on a bank reconciliation as a reduction from the bank side. Preferred stock dividends must be paid before common dividends can be paid The stated interest rate on an interest-bearing note is equal to the effective rate. Only events that can be measured will be reflected in the journal entries. All dividends reduce retained earnings Cardinal Company purchases Wal-Mart stock and intends to hold the stock for two years before selling. Cardinal should record this as a noncurrent asset on the balance sheet, even though the stock is easily converted to cash. The cash proceeds on a non-interest bearing note are higher than the principal amount of the note. Preferred stock dividends must be paid before common dividends can be paid. Depreciation expense is not closed at the end of the accounting period Building a new wing on an existing building would be considered a capital expenditure. This new wing is expected to increase the life of the building by 10 years. A loss is not included in computing net income from operations on a multi-step income statement. The cash proceeds on an interest-bearing note is equal to the principal amount of the note A bank reconciliation should be prepared only at year end. Every transaction affects both the income statement and the balance sheet Intangible assets are recorded on the balance sheet at their fair market value Land Improvement, unlike the asset - land, are depreciated