Performing Services on Account

question 21

Multiple Choice

Performing services on account:

• A)decreases both assets and liabilities.
• B)increases assets and decreases stockholders' equity.
• C)decreases revenues and decreases stockholders' equity.
• D)increases both net income and stockholders' equity.

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Definitions:

Free Cash Flow

The amount of cash generated by a company’s operations after accounting for capital expenditures, available for dividends, debt repayment, or reinvestment.

Property, Plant, Equipment

Long-term tangible assets owned by a business, used in its operations and not intended for resale, such as buildings, machinery, and vehicles.

Operating Activities

Business activities directly related to the production and delivery of goods and services, impacting the operating income.

Direct Method

The direct method is a way of preparing the cash flow statement that involves listing all the major operating cash receipts and payments during the period, showing the net cash provided by operating activities.