Beethoven Company provided consulting services and billed the client $3,100. As a result of this event,
A) assets remained unchanged.
B) assets increased by $3,100.
C) stockholders' equity increased by $3,100.
D) assets and stockholders' equity both increased by $3,100.

Question

Quizplus · Accepted Answer

When the Beethoven Company provided consulting services and billed the client $3,100, the company earned revenue. This revenue increases the company's assets by $3,100 and also increases the stockholders' equity by $3,100 since revenue increases both the assets and the equity. Therefore, option D is correct. Option A is wrong because assets increased by $3,100. Option B is wrong because the increase is not only in assets but also in the stockholders' equity. Option C is wrong because assets have also increased.

Beethoven Company Provided Consulting Services and Billed the Client $3,100