Yi Company provided services to a customer for $5,500 cash. Based on this information alone, which of the following statements is true?
A)Total assets increased and total stockholders' equity decreased.
B)Total assets were unchanged.
C)Liabilities decreased and net income increased.
D)Total assets increased and net income increased.

Question

Quizplus · Accepted Answer

The transaction involves receiving cash, which increases the total assets of the company. Since there is no mention of any expense or cost involved in providing the service, net income will also increase. Therefore, total assets increased and net income increased. There is no information to suggest any change in liabilities, so options A and C can be eliminated. Option B, that total assets were unchanged, is incorrect.

Yi Company Provided Services to a Customer for $5,500 Cash