Speedy Window Cleaning received $600 for window cleaning services provided. Which of the following represents the effect on the accounting equation?
A) Increase in assets of $600; increase in equity of $600.
B) Increase in assets of $600; decrease in assets of $600.
C) Increase in assets of $600; increase in liabilities of $600.
D) Decrease in assets of $600; decrease in equity of $600.

Question

Quizplus · Accepted Answer

The receipt of $600 for services provided represents an increase in assets (cash) of $600. Since this is revenue earned by the company, it also results in an increase in equity (retained earnings) of $600. Therefore, option A is the correct choice. Option B is incorrect because it implies that the company has decreased its assets by the same amount it received, which is not the case. Option C is also incorrect because there is no increase in liabilities related to the window cleaning services provided. Option D is incorrect because it suggests that the company has lost assets and equity, which is not accurate in this scenario.

Speedy Window Cleaning Received $600 for Window Cleaning Services Provided