If a business receives $5,000 on account from clients who owed money for services previously billed, identify the effect on the accounting equation:
A)assets decrease and liabilities increase.
B)assets remain the same and owner's equity remains the same.
C)liabilities decrease and owner's equity decreases.
D)owner's equity increases and revenue increases.

Question

Quizplus · Accepted Answer

Receiving money on account affects the composition of assets (increases cash while decreasing accounts receivable) but does not change the total amount of assets, liabilities, or owner's equity.

If a Business Receives $5,000 on Account from Clients Who