Performing Services on Account Would

question 8

Multiple Choice

Performing services on account would:

• A) increase net income and shareholders' equity
• B) increase revenue and decrease shareholders' equity
• C) increase assets and liabilities
• D) increase assets and decrease shareholders' equity

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Definitions:

Indirect Method

A method of preparing the cash flow statement in which net income is adjusted for changes in balance sheet accounts to calculate the cash from operating activities.

Operating Activities

These involve the core day-to-day functions and transactions of a business that are directly related to its primary operations, typically reflected in the cash flows from operating activities section of the cash flow statement.

Gain on Sale

The financial profit obtained from selling an asset for more than its purchase price or book value.