What is the effect on the accounting equation when a company recognizes rent as earned that had previously been received in advance from customers?

Question

Quizplus · Accepted Answer

Recognizing rent as earned that was previously received in advance will increase the revenues of the company, which will ultimately lead to an increase in net income. The accounting equation is:

Assets = Liabilities + Equity

Since there is no change in the assets or liabilities, an increase in revenue will directly increase equity and net income. Therefore, the correct choice is D, Net income increases.

What Is the Effect on the Accounting Equation When a Company