Explain how the following general journal entry affects the accounting equation.

A)Both assets and stockholders' equity increase.
B)Both liabilities and assets increase.
C)Assets increase and stockholders' equity decreases.
D)Liabilities increase and stockholders' equity decreases.

Question

Explain how the following general journal entry affects the accounting equation.

A)Both assets and stockholders' equity increase. 
B)Both liabilities and assets increase. 
C)Assets increase and stockholders' equity decreases. 
D)Liabilities increase and stockholders' equity decreases.

Quizplus · Accepted Answer

A debit to accounts receivable increases assets and a credit to service revenue increases stockholders' equity (retained earnings).

Explain How the Following General Journal Entry Affects the Accounting