Falana Received $7,000 in Cash from a Client for Professional

question 29

Multiple Choice

Falana received $7,000 in cash from a client for professional services rendered.This transaction would

• A) increase assets and increase owner's equity.
• B) decrease assets and increase owner's equity.
• C) increase liabilities and decrease owner's equity.
• D) decrease assets and decrease owner's equity.

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Definitions:

Nonmonetary Assets

Assets that cannot be readily converted into cash, such as property, equipment, and patents.

Successful-efforts Method

An accounting method used in the oil and gas industry focusing on capitalizing the cost of successful projects and expensing those of unsuccessful ones.

Full-cost Method

An accounting method where all direct and indirect costs of producing an asset are capitalized or included in its cost base.

Drilling Expense

Costs associated with the process of drilling, such as those incurred in the exploration and production of oil and gas resources.