A Bill from a Consultant Was Received for Work Done

question 60

Multiple Choice

A bill from a consultant was received for work done in May 2012.There was no previous record of the transaction.It will be paid in July 2012.In May 2012:

• A) an asset decreased and an expense increased
• B) an asset decreased and a liability decreased
• C) a liability increased and an expense increased
• D) no entry is required until the next accounting period.

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Definitions:

Classified Balance Sheet

A financial statement that organizes assets, liabilities, and equity into subcategories for clearer understanding and analysis.

Financial Statement

A formal record of the financial activities and position of a business, person, or other entity, including balance sheet, income statement, and cash flow statement.

Operating Cycle

The duration of time from when inventory is acquired to when cash is collected from receivables, reflecting a company's purchase, production, and sales process.

Worksheet

A document used by accountants to organize and compile data for financial statements and other reports; often a tool for preparatory work.