Which of the following transactions affects both the income statement and the statement of cash flows?

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A) Selling stock in exchange for cash.
B) Declaring and paying a cash dividend.
C) Selling a product to a customer which creates an account receivable.
D) Paying employee wages as they are earned.
Answer: D
Explanation: Paying an employee wages as they are earned results in an expense being
recognized (income statement) and a cash outflow (statement of cash flows).