Ibsen Company rendered services and collected half of the invoice in cash.The remaining balance is due at the end of the month.This transaction
A)increases assets, liabilities and stockholder's equity.
B)increases assets and liabilities; decreases stockholders' equity.
C)increases assets and stockholders' equity.
D)has no effect on the basic accounting equation.

Question

Quizplus · Accepted Answer

The transaction increases assets because cash is received and accounts receivable is created for the remaining balance. It also increases stockholders' equity because revenue is earned, which increases retained earnings.

Ibsen Company Rendered Services and Collected Half of the Invoice