Boone's Cleaning Service Performed Cleaning Services During December,2010,but Had Not

question 86

Multiple Choice

Boone's Cleaning Service performed cleaning services during December,2010,but had not collected any cash from its customers as of December 31,2010.What impact did performing these services have on the accounting equation?

• A)The service increased assets and increased liabilities.
• B)The service increased assets and increased stockholders' equity.
• C)The service increased assets and decreased stockholders' equity.
• D)The service decreased liabilities and decreased stockholders' equity.

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Definitions:

Cost Method

An investment accounting method where the investment is recorded at its acquisition cost, and income is recognized only when dividends are received.

Treasury Stock

Shares that were once a part of the outstanding shares of a company but were bought back and are held by the company itself.

Cost Method

An accounting method used to value inventory or investments at their original cost.

Par Value

A nominal value assigned to shares of stock, which may not reflect the actual market value.