Performing a Service on Account Would

question 115

Multiple Choice

Performing a service on account would:

• A)affect the accounting equation the same as if the service was performed for cash.
• B)increase assets more than if the service had been performed for cash.
• C)increase net income less than if the service had been performed for cash.
• D)decrease expenses more than if the service had been performed for cash.

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Definitions:

Equity Method

A method of accounting where an investor records its investment in an associate company at original cost and subsequently adjusts the carrying amount for its share of the profit or loss and other comprehensive income of the associate.

Consolidation

The process of merging the financial statements of two or more entities into one, typically within a group comprising a parent company and its subsidiaries.

Equity Method

An accounting technique used to record investments in other companies where the investor has significant influence but does not have majority control.

Statement of Comprehensive Income

A financial statement that shows all changes in equity during a period except those resulting from investments by and distributions to equity investors.