A Business Performs Services for Its Customers

question 68

Multiple Choice

A business performs services for its customers. Payment is expected to be received next month. How does the performance of services affect the accounting equation?

• A)Liabilities increase; owners' equity decreases.
• B)Assets increase; owners' equity decreases.
• C)Assets decrease; owners' equity decreases.
• D)Assets increase; owners' equity increases.

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Definitions:

Demand for Good

The quantity of a particular good or service that consumers are willing and able to purchase at various prices during a specified time period.

Square Feet

A unit of area measurement equivalent to the area of a square with sides of one foot in length.

Quasilinear Preferences

Preferences where utility is linear in one argument, usually money, allowing for easy analysis of changes in wealth while other goods are evaluated non-linearly.

Homothetic

Pertaining to a class of production functions or utility functions where equal proportionate changes in inputs result in equal proportionate changes in output.