Lush Lawns performs lawn mowing services for its customers. The payments for the current month's services are expected to be received next month. How does this transaction affect the accounting equation of Lush Lawn?

Question

Quizplus · Accepted Answer

The transaction increases accounts receivable (an asset) because the payment is expected next month, and it increases equity because the revenue from the services increases retained earnings.

Lush Lawns Performs Lawn Mowing Services for Its Customers