Root Company Provided Consulting Services and Billed the Client $2,500

question 54

Multiple Choice

Root Company provided consulting services and billed the client $2,500. As a result of this event,

• A) assets remained unchanged.
• B) assets increased by $2,500.
• C) owner's equity increased by $2,500.
• D) Both b and C

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Definitions:

Owners' Equity

The total value belonging to the owners of a company, calculated as the company's total assets minus its total liabilities, indicative of the net worth.

Net Worth

The total value of an individual's or organization's assets minus liabilities, representing the financial health or value of the entity.

Dividends

Payments made by a corporation to its shareholder members, distributing a portion of the company's earnings.

Objective of Accounting

The main purpose of accounting, which is to record financial transactions, summarize and report financial information accurately for decision making.