Sao Paulo Company performed services on account for R$160,000. This transaction will

Question

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When a company performs services on account (i.e. on credit), it increases its accounts receivable (asset) and its revenue (equity) by the same amount. Therefore, the accounting equation is balanced and there is no effect on liabilities. Option A is incorrect because it suggests that both assets and liabilities are affected, which is not the case. Option C is incorrect because it suggests that both liabilities and equity are affected, which is also not the case. Option D is incorrect because it implies that the transaction has no effect, which is certainly not the case.

Sao Paulo Company Performed Services on Account for R$160,000