Services are performed. Payment is expected next month. How does this affect the accounting equation?
A) Liabilities increase; owner's equity decreases.
B) Assets increase; owner's equity increases.
C) Assets decrease; owner's equity decreases.
D) Assets increase; owner's equity decreases.

Question

Quizplus · Accepted Answer

When services are performed and payment is expected in the future, it increases assets (accounts receivable) and increases owner's equity due to the revenue earned, reflecting the accrual basis of accounting.

Services Are Performed