A Business Performs Services for Its Customers

question 85

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)Assets increase;owners' equity increases.
• B)Liabilities increase;owners' equity decreases.
• C)Assets decrease;owners' equity decreases.
• D)Assets increase;owners' equity decreases.

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Definitions:

Purchase Order

A formal document sent from a buyer to a supplier with a request to purchase specified products or services at agreed upon terms.

Withdrawal Kanban

A signaling system within the Just-in-Time (JIT) manufacturing process that indicates when to withdraw parts or materials from the supply chain to the production line.

Activity-Based Costing

A method of allocating overhead and indirect costs to specific activities, providing more accurate product or service costing.

Production Stage

A specific phase in the manufacturing process where raw materials are transformed into finished goods.