13. A company received a $24,000 payment for services to be performed over the n

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Question

13. A company received a $24,000 payment for services to be performed over the next few months. What would the effect of this transaction on the current year’s accounting equation?

Select one:

A. No effect on Assets; $24,000 decrease in Liabilities; $24,000 increase in Stockholders’ Equity

B. $24,000 increase in Assets; $24,000 increase in Liabilities; No effect on Stockholders’ Equity

C. $24,000 increase in Assets; No effect on Liabilities; $24,000 increase in Stockholders’ Equity

D. No effect on Assets; $24,000 increase in Liabilities; $24,000 decrease in Stockholders’ Equity

Explanation / Answer

Account equation:

So answer is b) $24,000 increase in Assets; $24,000 increase in Liabilities; No effect on Stockholders’ Equity

Assets = Liabilities + Stockholder's equity Cash $24000 = Unearned revenue $24000 + NA

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13. A company received a $24,000 payment for services to be performed over the n

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Explanation / Answer

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