Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 42 - No. 39)
What is the effect on the accounting equation when a company receives cash from a customer for services performed?
Assets decrease, liabilities increase.
Assets increase, liabilities increase.
Assets increase, equity increases.
Assets decrease, equity decreases.
Explanation
Cash (an asset) increases and service revenue (increasing equity) is recognized.
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