Powers Corporation received a cash advance of $500 from a customer.As a result of this event,
A)assets increased by $500.
B)equity increased by $500.
C)liabilities decreased by $500.
D)Both assets and equity increased by $500.

Question

Quizplus · Accepted Answer

When Powers Corporation received a cash advance of $500, its assets increased by $500 due to the cash received. However, this advance also creates a liability (unearned revenue) until the service or product is delivered, so equity does not increase.

Powers Corporation Received a Cash Advance of $500 from a Customer.As