Accounting services were provided to a customer for cash. How would this affect the accounting equation?
A) Cash and Accounts Receivable increase.
B) Accounts Payable decreased and Capital decreased.
C) Cash and Revenue increase.
D) None of the above are correct.

Question

Quizplus · Accepted Answer

When accounting services are provided to a customer for cash, the company's cash (an asset) increases because they received payment. Simultaneously, the company recognizes revenue for the services provided, which increases the equity side of the accounting equation through an increase in retained earnings.

Accounting Services Were Provided to a Customer for Cash