A Business Renders Services to a Client and Issues a Sales

question 109

Multiple Choice

A business renders services to a client and issues a sales invoice. The amount will be collected from the customer at a later time. Which of the following would be true at the time the invoice is issued?

• A)Owner's equity will decrease.
• B)Total liabilities will increase.
• C)Total assets will decrease.
• D)Net income will increase.

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Definitions:

Open Market Operations

Actions undertaken by a central bank, such as buying or selling government securities, to control the money supply and interest rates.

Federal Reserve District Banks

The 12 regional banks that make up the Federal Reserve System of the United States, each serving a specific geographic area.

Securities

Financial instruments that represent an ownership position in publicly-traded corporations (stocks), a creditor relationship with a governmental body or a corporation (bonds), or rights to ownership as represented by an option.

Bond Prices

are the market value of bonds, which inversely correlate with interest rates; when rates go up, bond prices typically go down, and vice versa.