Which of the Following Is Correct, Assuming the Following Transaction

question 20

Multiple Choice

Which of the following is correct, assuming the following transaction: Nixon Company sold services on account.

• A) Cash is credited.
• B) Accounts Receivable is credited.
• C) Income from Services is credited.
• D) Cash is debited.

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Definitions:

Consolidated Statements

Financial statements that present the assets, liabilities, equity, income, expenses, and cash flows of a parent company and its subsidiaries as a single economic entity.

Significant Influence

The power to participate in the financial and operating policy decisions of an investee, without having full control or joint control, typically associated with ownership of 20% to 50% of voting stock.

Shareholders' Equity

The residual interest in the assets of a corporation that remains after deducting liabilities, representing the ownership interest of shareholders.

Pre-acquisition Profits

The earnings generated by an acquired company prior to the date on which it was acquired by the parent company.