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?
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 a business performs services for its customers with the expectation of payment in the future, it records an increase in assets (accounts receivable) and an increase in owner's equity (revenue).

A Business Performs Services for Its Customers