Doug’s Doodle Shop, specializing in dog supplies, signs a contract with a pet groomer.
Next month, the groomer will begin leasing a portion of Doug’s store and provide
grooming services. The signing of the contract:
Multiple Choice
has no effect on the accounting equation.
increases assets.
increases liabilities.

The signing of the contract could be seen as a commitment between Doug’s Doodle Shop and the pet groomer, which doesn’t immediately affect cash or other assets, but it establishes a future leasing relationship that could lead to increased assets and possibly liabilities over time. The initial signing itself might not increase assets or liabilities at that moment, but it does lead to an expectation of future financial transactions.

In a practical sense, Doug could capitalize on this partnership by cross-promoting services to maximize revenue. For example, customers buying dog supplies may be more inclined to take advantage of on-site grooming services, effectively increasing foot traffic and sales for both Doug’s Doodle Shop and the groomer. This collaboration can create a win-win scenario!