Payment is received from customers who were billed earlier for services provided for them.For this transaction,identify the effect on the accounting equation.
A)Assets increase and liabilities increase.
B)Assets increase and stockholders' equity increases.
C)Liabilities increase and stockholders' equity decreases.
D)There is no effect on the accounting equation as one asset account increases while another asset account decreases.

Question

Quizplus · Accepted Answer

When payment is received from customers who were previously billed, cash (an asset) increases, while accounts receivable (another asset) decreases by the same amount, leaving the accounting equation unchanged.

Payment Is Received from Customers Who Were Billed Earlier for Services