Brooks Landscaping Company performs lawn mowing services for its customers in May.Payments for May's services are expected to be received in June.How does the transaction for performing services in May affect the accounting equation of Brooks Landscaping?
A) liabilities increase and equity decreases
B) assets and equity increase
C) assets and equity decrease
D) liabilities and equity increase

Question

Quizplus · Accepted Answer

Performing lawn mowing services in May would increase the company's assets (cash or accounts receivable) and also increase equity (revenue earned for services provided). There is no change to liabilities as no payment has been received yet. Therefore, choice B is correct.

Brooks Landscaping Company Performs Lawn Mowing Services for Its Customers