Revenue has the effect of:
A) increasing assets and decreasing liabilities.
B) increasing assets and owners' equity.
C) increasing assets and decreasing owners' equity.
D) leaving the entire balance sheet unchanged.

Question

Quizplus · Accepted Answer

Revenue increases the assets and owners' equity of a company. This is because revenue represents income earned from operations, and as such, increases the overall value (assets) of the company. This income also increases the amount of money the company has to reinvest or distribute to shareholders (owners' equity).

Revenue Has the Effect Of