A Company Performed Services for a Customer on Account

question 5

Multiple Choice

A company performed services for a customer on account. This transaction increased assets and:

• A)increased revenues.
• B)increased expenses.
• C)increased liabilities.
• D)decreased equity.

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Definitions:

Guarantee

A formal promise or assurance, typically in writing, that certain conditions will be fulfilled or that a product will meet a specified level of quality.

Indemnity

A contractual obligation of one party to compensate the loss incurred by another party.

Contract Law

The body of law that regulates legally binding agreements between parties.

Income-Splitting

A tax strategy used by families or partnerships to divide income amongst members to lower the overall tax liability by utilizing lower tax brackets.