A&M Co.provided services of $1,000,000 to clients on account.How does this transaction affect A&M's accounts?
A) Increase accounts receivable and cash by $1,000,000 each
B) Increase accounts receivable and revenues by $1,000,000 each
C) Increase accounts receivable and unearned revenues by $1,000,000 each
D) Increase cash and decrease accounts receivable by $1,000,000 each

Question

Quizplus · Accepted Answer

When A&M provided services to clients on account, it means that they will receive payment in the future. This increases their accounts receivable since the client owes them money. At the same time, the service provided generates revenue for the company, which increases their revenue account. Therefore, choice B is the best option.

A&M CoProvided Services of $1,000,000 to Clients on Account