Boone's Cleaning Service performed cleaning services during December 2016, but had not collected any cash from its customers as of December 31, 2016. What impact did performing these services have on the accounting equation?
A)The service increased assets and increased liabilities.
B)The service increased assets and increased stockholders' equity.
C)The service increased assets and decreased stockholders' equity.
D)The service decreased liabilities and decreased stockholders' equity.

Question

Quizplus · Accepted Answer

Performing the cleaning services would increase the company's assets (as they have earned revenue) and increase stockholders' equity (as retained earnings have increased). There is no impact on liabilities as the company has not collected any cash yet.

Boone's Cleaning Service Performed Cleaning Services During December 2016, but Had