A business renders services to a client and issues a sales invoice.The amount will be collected from the customer at a later time.Which of the following is TRUE at the time the invoice is issued?
A) Equity will decrease.
B) Total liabilities will increase.
C) Total assets will decrease.
D) Net income will increase.

Question

Quizplus · Accepted Answer

When a business issues a sales invoice for services rendered, it recognizes revenue at that time, which increases net income. The transaction does not immediately affect equity, liabilities, or total assets directly in the sense of decreasing them. However, it does increase accounts receivable, a type of asset, reflecting the expectation of future cash inflow.

A Business Renders Services to a Client and Issues a Sales