Entity A undergoes a transaction in the current period in which the assets of the entity increase by more than liabilities (causing an increase in equity). Should this be recognized as income?
A) Yes
B) No

Question

Quizplus · Accepted Answer

This scenario describes a situation where the entity's assets increase more than its liabilities, resulting in an increase in equity. According to accounting principles, increases in equity from a company's earnings activities are recognized as income. Therefore, this transaction should be recognized as income.

Entity a Undergoes a Transaction in the Current Period in Which