A business performs services for its customers.Payment is expected to be received next month.How does the performance of services affect the accounting equation?

Question

Quizplus · Accepted Answer

Performing services for customers represents a revenue-generating activity for the business, which increases its assets (e.g. cash, accounts receivable) and, consequently, its owners' equity. The accounting equation can be expressed as Assets = Liabilities + Owners' equity, so an increase in both assets and owners' equity would not alter the equation. Therefore, option A is the correct answer.

A Business Performs Services for Its Customers