If a business receives $5,000 on account from clients who owed money for services previously billed,identify the effect on the accounting equation
A) assets decrease and liabilities increase.
B) liabilities decrease and owner's equity decreases.
C) assets remain the same and owner's equity remains the same.
D) owner's equity increases and revenue increases.

Question

Quizplus · Accepted Answer

Receiving $5,000 on account increases cash (an asset) and decreases accounts receivable (another asset) by the same amount, so total assets remain unchanged. There is no effect on liabilities or owner's equity.

If a Business Receives $5,000 on Account from Clients Who