Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 45 - No. 46)
When a customer pays cash in advance for a service, what is the effect on the accounting equation?
Assets increase, liabilities decrease.
Assets decrease, liabilities increase.
Assets increase, liabilities increase.
Assets decrease, liabilities decrease.
Explanation
Cash (an asset) increases, and unearned revenue (a liability) increases.
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