Genie performs service on account, which means that Genie lets some customers pa

Question

Genie performs service on account, which means that Genie lets some customers pay later.  Genie earns revenue but doesn't recieve the cash immediately.  In transaction 5, Genie cleans a fleet of UPS delievery truck, and PPS promises to pay Genie $3000 within one month.  This promise is an account recievable an asset of Genie Car Wash.  The transaction reords follows: Its performing the service that earns the revenue not collection the cash.  Therefore, Genie records revenue when it performs the service regardless of whether Genie recieves cash now or later

How does it impacts the accounting equation.  Make sure to identify the account impacted.  Why is it important to record your selected transaction?

ANSWER ALL QUESTIONS

Explanation / Answer

This will disbalance accounting equation. which means asset not equal to liability.

Account impacted is account receivable. Because when she actually receives cash in that time she has to reduce $3000 from account receivable section and add $3000 to cash section. If she doesn't make account receivable section then she might get in trouble.

Related Questions

Navigate

• Browse (All)
• Browse G
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.