A Transaction Involving the Receipt of a $10,000 by a CPA

question 13

Multiple Choice

A transaction involving the receipt of a $10,000 by a CPA prior to any works being performed on behalf of the client would:

• A)decrease assets and increase liabilities
• B)increase liabilities and increase assets
• C)increase net income and increase assets
• D)increase stockholders' equity and increase assets

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Definitions:

Adjusted Trial Balance

A compilation of all accounts along with their balances, post-adjustment entries, employed during the creation of financial reports.

Closing Entries

Journal entries made at the end of an accounting period to transfer temporary accounts to permanent accounts and prepare the company's books for the next period.

End-of-period Spreadsheet

A financial document used to summarize account balances and adjustments at the conclusion of an accounting period before preparing financial statements.

Closing Entries

Entries recorded at the conclusion of a fiscal period to move balances from temporary accounts to permanent ones, thus readying the accounts for the upcoming period.