Which of the Following Situations Would Result in an Increase

question 40

Multiple Choice

Which of the following situations would result in an increase in income under the accrual method of accounting,but would NOT result in an increase in income under the cash-basis method of accounting?

• A) Purchase of supplies for cash
• B) Performance of services on account
• C) Use of supplies purchased earlier
• D) Receipt of cash for services that were performed earlier on account

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Definitions:

Balance Sheet

A financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time, giving a snapshot of its financial condition.

Balance Sheet

An overview document showing a business’s assets, liabilities, and the equity of its shareholders on a specific date.

Sole Proprietorship

A business structure where an individual owns and operates the business entirely, bearing unlimited liability for its debts and obligations.

Stockholders' Equity

The owners' claim after subtracting total liabilities from total assets, representing the net value of a company to its shareholders.