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Consider the Following Short Case as You Respond to the Next

question 27

Multiple Choice

Consider the following short case as you respond to the next nine questions: ABC Consulting's employees include management, consultants and office staff.The company accepts engagements related to internal control design and evaluation, as well as enterprise risk management plans.A customer can purchase the two services independently of one another.The office staff bills clients on a monthly basis with terms of 2/10, n/30.All consulting clients must sign a contract, which is also signed by an ABC manager.One member of ABC's management team assigns at least one consultant to work with the customer until the engagement is complete.Consultants can be assigned to multiple engagements simultaneously, but every consultant must always be working on at least one engagement.Each client may have only one contract with ABC at a time.In a REA model of the case, how many boxes would you expect to see in the second column?

Definitions:

Insurance Expense

The cost associated with purchasing insurance to protect against various risks, recorded as an expense.

Unearned Revenue

Money received by a company for goods or services yet to be provided. It is considered a liability until the service is delivered or the product is provided.

Investments

Assets purchased with the aim of generating income or appreciation, including securities, real estate, and other financial assets.

Wages Payable

A liability account that records the amount of unpaid wages earned by employees at the end of a reporting period.