A company provides services on account.Indicate how this transaction would affect (1)assets, (2)stockholders' equity,and (3)revenues.

Question

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When a company provides services on account, it creates an account receivable asset which increases the assets. Stockholders' equity also increases as revenue is earned from the services provided. Therefore, both assets and stockholders' equity increase. Additionally, revenues increase as the company has provided services and earned income.

A Company Provides Services on Account