A Business Performs Services for Its Customers

question 98

Multiple Choice

A business performs services for its customers.Payment is expected to be received next month.How does the performance of services affect the accounting equation?

• A) Liabilities increase; owner's equity decreases.
• B) Assets increase; owner's equity increases.
• C) Assets decrease; owner's equity decreases.
• D) Assets increase; owner's equity decreases.

---

Definitions:

Average Total Cost

The per unit cost of production, computed by dividing the total cost of production by the total quantity of output.

Average Fixed Cost

The fixed costs of production (costs that do not change with the level of output) divided by the quantity of output produced.

Marginal Costs

The expense incurred from manufacturing an extra unit of a product or service.

Average Total Costs

The total costs (fixed and variable) of production divided by the quantity of output produced.