Faust Company Uses the Perpetual Inventory System

question 50

Multiple Choice

Faust Company uses the perpetual inventory system. Faust sold goods that cost $5,600 for $9,200. The sale was made on account. What is the net effect of the sale on the company's financial statements?(Consider the effects of both parts of this event.)

• A)Increase total assets by $9,200
• B)Increase total assets by $3,600
• C)Increase total stockholders' equity by $9,200
• D)Increase total assets by $5,600

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Definitions:

Precontemplation

A stage in the Transtheoretical Model of Behavior Change where the individual is not yet considering change or unaware of the need to change.

Action

The process of doing something in order to achieve a specific goal or result.

Stages of Change

A concept in psychology that maps out the phases individuals go through as they modify behavior, ranging from precontemplation to maintenance.

Transtheoretical Model

A theory of behavior change that assesses an individual's readiness to act on a new healthier behavior, and provides strategies, or processes of change to guide the individual.